CyberKongz, a game-based NFT project, has issued a Wells notice from the US Securities and Exchange Commission raising concerns about the integration of its ERC-20 token and blockchain games, which indicates that litigation may be imminent.
The team said in the Dec. 16 X-Post that it was “extremely disappointed with the SEC’s approach,” referring to Well’s notice, a formal warning from the SEC of possible enforcement. They also vowed to fight back, arguing the outcome could have serious consequences for the Web3 gaming and NFT sectors.
The SEC has raised some concerns about the CyberKongz pairing ERC-20 token with his Blockchain based Game. The SEC’s law enforcement agency argued in CyberKongz’s case that this setup was a security that needed to be registered, similar to the stance it took ripple. This position, the project argued, demonstrated a lack of understanding of blockchain technologies and would set a dangerous precedent throughout the Web3 gaming industry.
The SEC’s concerns relate to its view that the 2021 Genesis Kongz contract migration was a primary sale. CyberKongz said this was a confusing interpretation of smart contracts and accused the regulator of failing to distinguish between technical processes and actual token sales.
CyberKongz stated that its team has been under the microscope for the past two years and has suffered in silence during this time. With a small team and no prior capital raises or large funding, the project will now seek to challenge the SEC’s position to enforce clearer rules in the digital assets space.
The statement also attempted to blame the current government, claiming its “anti-crypto agenda” has harmed the entire blockchain industry and expressed hope for a new direction under the next administration. CyberKongz also expressed solidarity with industry leaders, including Brian Armstrong of CoinbaseDevin Finzer from OpenSeaand Hayden Adams of Uniswap Labswho also face regulatory pressure from the SEC.
“It is becoming increasingly clear that the current administration is trying to push through its anti-crypto agenda at the last minute. We hope the new government will put an end to this injustice.”
CyberKongz is X
By treating tokens as securities, the SEC aims to subject them to greater regulatory scrutiny and compliance with existing financial regulations by imposing registration and disclosure requirements on projects similar to those of traditional financial instruments. criticism say this approach stifles innovation and overlooks the decentralized nature of blockchain technologies.
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