The SEC Notifies CyberKongz of Wells
Recently, CyberKongz received a Wells notice from the U.S. Securities and Exchange Commission (SEC) indicating that the SEC intends to pursue enforcement action against the NFT initiative. Concerns in the web3 gaming and NFT ecosystem have increased as a result of this development.
Leading blockchain-based gaming company CyberKongz announced earlier this week that they would “stand up and fight” the SEC’s accusations.
A Two-Year Regulatory Examination
CyberKongz claims that the project has been under constant SEC examination for more than two years. According to the team, the regulator has shown a serious lack of knowledge about blockchain technology, which has resulted in “unjust accusations and information inaccuracies.”
“Since we first got in touch with the SEC two years ago, we have been suffering in silence,” the club said in a statement. “They have demonstrated a total lack of knowledge about blockchain technologies throughout the entire process.”
Effects on Web3 Gaming
The use of an ERC-20 token in combination with a blockchain game—which the SEC maintains needs to be registered as a security—is one of its main worries. CyberKongz cautions that this interpretation may have significant ramifications for the whole web3 gaming market.
The project declared, “We will fight against this stance for the wider space, as this discourse would have major implications for the entire web3 gaming industry.”
Prior Measures Against OpenSea
The SEC’s targeting of the NFT industry is not new. The agency claimed that NFTs sold on OpenSea are securities in a Wells notice sent to the NFT marketplace in August.
The Debate Around Smart Contracts
The SEC’s understanding of blockchain technology, specifically smart contracts, has also drawn criticism from CyberKongz. CyberKongz emphasizes that the “sale” of Genesis Kongz in April 2021 was a contract migration rather than a primary sale, notwithstanding the regulator’s worries.
The team asked, “What hope do we currently have for a clear regulatory pathway going forward if they cannot distinguish between a primary sale and a contract migration?”
Gazing Ahead
The case underscores the rising conflict between blockchain inventors and regulatory bodies as CyberKongz gets ready to contest the SEC’s accusations. The result might establish a standard for future legal and regulatory framework navigation by NFTs and blockchain gaming initiatives.
