In a recent update, CyberKongz, a popular gaming-based NFT project, revealed that they had received a Wells Notice from the U.S. Securities and Exchange Commission (SEC). This notice raised concerns regarding the platform’s integration of its ERC-20 token with blockchain games and questioned certain aspects of its activities, specifically focusing on the 2021 contract migration.
The SEC’s main argument seems to be centered around whether or not ERC-20 tokens can operate alongside blockchain games without being categorized as securities. This issue has far-reaching implications for the entire Web3 gaming industry. CyberKongz expressed disappointment with the SEC’s handling of the matter but vowed to fight for a better future that provides more clarity for other NFT projects.
One of the points of contention is the Genesis Kongz contract migration in April 2021, which the regulator interprets as a token sale. CyberKongz clarified that this migration was not a primary sale and criticized the SEC’s inability to differentiate between the two. This development gives the platform 30 days to respond before the SEC decides whether to pursue any enforcement action.
This isn’t the first time the SEC has issued such warnings; other prominent blockchain and NFT companies like Coinbase, Consensys, Ripple, OpenSea, Uniswap Labs, and Bittrex have faced similar challenges in recent years. Last month, another Australian-based gaming company called Immutable also reported receiving a Wells Notice from the SEC.
However, no further action has been taken against them so far. Despite these challenges, CyberKongz remains committed to advancing its work without the added burden of silence. They believe that this situation represents a turning point where they can continue to advocate for clearer guidelines within the NFT and blockchain industries.
Source
As per reported by cryptopotato.com