Gaming tokens may face setbacks after NFT platform CyberKongz received a Wells notice from the United States Securities and Exchange Commission (SEC). The SEC raised concerns about ERC-20 tokens and blockchain games being issued without being registered as securities. CyberKongz stated that such discourse would have significant implications for the Web3 gaming industry.
A Wells notice is a formal letter from the SEC informing an entity that the regulator is considering an enforcement action after completing a preliminary investigation. CyberKongz has 30 days to respond. The SEC’s concerns stemmed from CyberKongz’s sale of Genesis Kongz NFTs in April 2021, which the NFT firm claimed was a contract migration and not a primary sale.
CyberKongz stated that it has never raised capital and has a small treasury. The enforcement action is seen as a last-minute attempt by the Biden administration to set the industry back. CyberKongz’s NFT price remained unaffected by the Wells notice.
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