Web3 gaming company Immutable announced on Nov. 1 that it had been issued a Wells notice by the U.S. Securities and Exchange Commission (SEC). The notice alleges, but does not specify, violations of securities laws and misrepresentations by the gaming company. Immutable believes the claims center on the listing and private sales of IMX tokens in 2021.
According to Immutable, the notice, which the company characterizes as part of the SEC’s “de facto policy of regulation-by-enforcement,” suggests a possible lawsuit. While Immutable vows to continue building products and services for games and players, its statement laments the disruption the SEC’s approach causes to its operations.
As Bitcoin.com News previously reported, the SEC has used this regulation-by-enforcement against several blockchain and Web3 companies in the past year. However, courts have pushed back in some instances, with one U.S. judge describing a certain SEC decision as “arbitrary and capricious.” Despite these setbacks, the SEC continued using the same approach, targeting Opensea in late August.
While the SEC has previously focused on blockchain networks, the Wells Notice against Immutable marks the first time a gaming company has been targeted.
“With this latest move against Immutable, the SEC’s overreach has expanded into gaming. Additionally, we are aware of related inquiries, but no actual or proposed legal action, from the DOJ. Immutable, like many other companies in crypto, has spent millions of dollars in governance and legal fees in order to be compliant. We welcome regulatory clarity – but it appears that some elements of SEC do not want to engage in a constructive dialogue,” Immutable said in a statement.
The gaming company added that the SEC’s unclear and inconsistent approach to regulating cryptocurrencies is causing confusion among companies, hindering innovation and compliance efforts.
The Wells Notice was reportedly issued within hours of the company counsel’s first interaction with the SEC. The U.S. regulator is reported to have taken a broad approach by issuing Wells notices to the gaming company’s CEO and the Digital Worlds Foundation.
Immutable urged the SEC to create “clear and fit-for-purpose” rules and guidelines for the industry to follow. It also encouraged the regulator to use a fair process and engage in meaningful dialogue before taking enforcement actions. Immutable warned that the industry would continue to fight against any less favorable approach.
