The team behind the CyberKongz NFT collection has stated that it received a Wells Notice from the U.S. Securities and Exchange Commission (SEC), potentially leading to legal proceedings. In a post on X, the developers expressed disappointment with the SEC’s approach and confirmed their willingness to fight for clearer regulations for NFT projects.
What We Know
A Wells Notice is a notification from the SEC that informs a company its staff may initiate an investigation. This step often leads to litigation. CyberKongz stated that it received such a notice and expressed dissatisfaction with the SEC’s stance on issues related to the company’s gaming projects and smart contracts.
CyberKongz emphasized that their business first encountered difficulties two years ago, when the SEC began paying attention to its activities. During this period, the commission established that having an ERC-20 token combined with a blockchain-based game might require registering that token as a security.
SEC’s Main Concerns with CyberKongz
According to representatives of the collection, the SEC is also concerned about CyberKongz’s dealings with Genesis Kongz in April 2021. In response, the company stated that the SEC cannot distinguish between an initial token offering and a regular contract migration, which is what actually took place. This point worries CyberKongz regarding the future of NFT regulation.
Following the news, the collection’s floor price rose. Over the past 24 hours, the CyberKongz NFT floor price increased by 1.94% to 6.5 ETH (~$25,900). The collection’s daily trading volume grew by 389%.
Fighting for Regulatory Clarity in NFTs
CyberKongz expressed its intention to continue fighting for more transparent rules for NFT projects. The company believes that the current SEC administration is trying to impose an anti-crypto agenda at the last moment, and hopes that a new administration, which will come after President Donald Trump’s inauguration, will change the current situation.
Recall that on November 22, current SEC Chair Gary Gensler announced he would step down on January 20. Many in the crypto industry welcomed Gensler’s departure, claiming he hindered the sector’s growth by preferring litigation over constructive dialogue.
Until the administration changes, CyberKongz plans to fight for the rights of NFT projects across all blockchain platforms, according to their statement.
This is not the first time the SEC has intervened in the NFT sector. In 2023, the SEC charged Impact Theory with conducting unregistered NFT offerings, and the major NFT marketplace OpenSea previously received a Wells Notice from the SEC as well.