The US Securities and Exchange Commission (SEC) recently sent a notice from Wells to CyberKongz, indicating that the regulator plans to take enforcement action against the non-fungible token (NFT) project.
CyberKongz made the announcement this week, saying it plans to “stand up and fight” in response to the SEC’s crackdown.
“We have suffered in silence for the past two years, ever since we first contacted the SEC. Throughout the process, they have demonstrated a complete lack of understanding of blockchain technologies, which has resulted in unwarranted accusations and inaccuracies in the information.
CyberKongz is a project deeply rooted in gaming and the SEC’s Division of Enforcement has approached us with the very disturbing rhetoric that you cannot have a token (ERC-20) in conjunction with a blockchain game without registering it as a security. This discourse would have major ramifications for the entire Web3 gaming industry, and we will defend against this position in the broader space.”
The SEC also sent a notice from Wells to the NFT marketplace OpenSea in August, claiming that NFTs on the platform are securities.
CyberKongz also says the regulator’s Wells notice “demonstrated a baffling interpretation of smart contracts.”
“One of their biggest concerns with CyberKongz concerns the ‘sale’ of Genesis Kongz in April 2021, which was actually a contract migration. If they cannot distinguish between a primary sale and a contract migration, what hope do we currently have for a clear regulatory pathway in the future?”
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