CyberKongz NFT Project Under SEC Scrutiny
The U.S. Securities and Exchange Commission (SEC) has issued a Wells Notice to CyberKongz, signaling heightened regulatory action. This development raises fresh concerns about the future of web3 gaming.
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The U.S. Securities and Exchange Commission (SEC) has issued a Wells Notice to CyberKongz, signaling heightened regulatory action. This development raises fresh concerns about the future of web3 gaming.
The CyberKongz team issued an official statement expressing their profound frustration with the SEC’s position, accusing the agency of displaying a “complete lack of understanding of blockchain technologies.”
They revealed that the investigation has been ongoing for two years and described the process as baseless, marred by “unjust accusations and information inaccuracies.”
The dispute centers on the use of ERC-20 tokens in blockchain-based games. CyberKongz explained that the SEC's enforcement division claims:
You cannot have a token in tandem with a blockchain game without registering it as a security
CyberKongz has sounded the alarm, warning that the SEC’s approach could significantly harm the entire web3 gaming ecosystem.
Related: Crypto.com Goes to War with SEC and Gary Gensler
The situation becomes even more challenging with the SEC’s confusion over smart contracts. The regulator questioned the 2021 “sale” of Genesis Kongz, which, according to CyberKongz, was merely a contract migration.
If they cannot distinguish between a primary sale and a contract migration, what hope do we currently have for a clear regulatory pathway going forward?
CyberKongz accused the current U.S. administration of advancing an “anti-crypto agenda” but underscored their readiness to advocate for fairer, clearer regulations for NFT projects.
Our vision has always been on innovation and pushing boundaries in web3. We are now going to fight for a clearer regulatory pathway for digital assets on the blockchain
said the CyberKongz team.
Remarkably, market sentiment remains positive. CoinGecko data revealed that the CyberKongz NFT floor price jumped 9.1% to 7.8 ETH within 24 hours following the announcement.
NFT CyberKongz Climbs 9,1% Source: CoinGecko
The Wells Notice for CyberKongz comes on the heels of similar SEC actions against Immutable in November, where the legality of token sales was likewise called into question.
Undeterred, the CyberKongz team views this as “a a new beginning,” one where they can move beyond “the burden of suffering in silence.” They also extended their support to other projects facing similar regulatory battles, offering guidance and assistance.
CyberKongz NFTs are celebrated for their Play & Kollect integration on Ronin, providing users with dynamic engagement through randomly generated 2D and 3D avatars.
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