SEC Hits Gaming Firm CyberKongz With Wells Notice, Clash Over ‘Sale’ of Genesis Kongz

NFT project CyberKongz has announced that it has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC). A Wells Notice is typically issued when the SEC believes a company has violated securities laws, signaling potential enforcement action.

The team behind CyberKongz expressed their disappointment with the SEC’s approach, claiming that the regulator has shown a lack of understanding of blockchain technology. They argue that this has led to inaccurate accusations and confusion about their project.

CyberKongz has been in contact with the SEC for over two years, with the most recent issue surrounding the combination of an ERC-20 token and a blockchain game. CyberKongz has pledged to fight this stance, not just for their own project, but for the broader NFT and blockchain gaming community. “We have been suffering in silence for the last two years, ever since we first received contact from the SEC,” they said.

A key point of contention between the SEC and CyberKongz involves the “sale” of Genesis Kongz in April 2021. The CyberKongz team explains that this was actually a contract migration, not a sale. They argue that if the SEC cannot distinguish between a primary sale and a contract migration, it raises concerns about the clarity of regulatory guidelines for digital assets moving forward.

The CyberKongz team also expressed concern that the current administration may be pushing an anti-crypto agenda. However, they are positive that the new administration will bring more fairness to the regulatory landscape.

In their statement, CyberKongz also expressed solidarity with other leaders in the space, such as Brian Armstrong, Devin Finzer, and Hayden Adams, who are also fighting for clearer regulations. “For the CyberKongz community, this is the start of a new beginning. One without the burden of us suffering in silence and working in fear,” they concluded.