CyberKongz, an NFT and blockchain gaming project, has announced that it has received a Wells Notice from the US Securities and Exchange Commission (SEC). The team publicly disclosed the development in a statement posted on X (formerly Twitter), expressing disappointment at the SEC’s approach while pledging to challenge the agency’s stance on NFTs and blockchain gaming.‍

The Allegations

CyberKongz revealed that the SEC’s Division of Enforcement raised concerns over the project’s operations, specifically regarding its ERC-20 token and blockchain gaming integration. According to CyberKongz, the SEC has argued that having a token alongside a blockchain-based game requires the token to be registered as a security.

The team highlighted the potentially far-reaching implications of this interpretation. “This discourse would have major implications for the entire Web3 gaming industry, and we will defend against this stance for the wider space,” CyberKongz stated.

Additionally, the SEC questioned the nature of CyberKongz’s Genesis Kongz sale in April 2021, describing it as a primary sale of digital assets. CyberKongz pushed back, clarifying that the event was a contract migration rather than a traditional asset sale. “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?” the team noted.‍

CyberKongz Calls for Clarity in Regulation

CyberKongz criticized the SEC for what it described as a “lack of understanding” of blockchain technologies. The project claims to have been under investigation for two years, during which it “suffered in silence” while navigating the regulatory scrutiny.

The team voiced concerns about the broader anti-crypto stance of the current administration but expressed hope for a shift in approach under future leadership. “It has become increasingly apparent that the current administration is trying to force their anti-crypto agenda at the last minute,” CyberKongz said.‍

A Stand for the Industry

In its statement, CyberKongz emphasized its intention to fight the SEC’s claims not only for its own project but for the entire Web3 and NFT ecosystem. The team stated, “We are now going to fight for a clearer regulatory pathway for digital assets on the blockchain.”

CyberKongz also expressed solidarity with others in the crypto space who have faced similar regulatory challenges, including Coinbase CEO Brian Armstrong, OpenSea co-founder Devin Finzer, and Uniswap founder Hayden Adams.

Addressing its community, CyberKongz framed the situation as a new beginning for the project. “It is a huge sigh of relief to have these shackles lifted from us and put this into a public domain,” the team said. “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.”

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