CyberKongz Receives SEC Wells Notice

The NFT collection CyberKongz has announced that the U.S. Securities and Exchange Commission (SEC) intends to bring charges against it regarding gaming and smart contracts.

In a post on X on Monday, CyberKongz revealed that it received a Wells Notice. This notice informs a company that the SEC staff may recommend an enforcement action.

> "CyberKongz has received a Wells Notice from the SEC," the announcement stated. "We are extremely disappointed at the approach the SEC has taken towards us, but we are going to stand up and fight for a brighter future that holds more clarity for NFT projects."

An SEC spokesperson commented, "The SEC does not comment on the existence or nonexistence of a possible investigation."

CyberKongz expressed that it has been "suffering in silence" for two years since the SEC initially contacted them. The collection stated that the SEC's enforcement team made concerning remarks about the necessity of registering ERC-20 tokens used with blockchain games as securities.

Additionally, CyberKongz noted the SEC's worries regarding its business dealings with Genesis Kongz in April 2021, which it termed as "contact migration." They criticized the SEC's inability to differentiate between primary sales and contract migrations, raising concerns about regulatory clarity in the future.

CyberKongz affirmed its commitment to advocate for clearer regulations, particularly concerning NFT projects.

> "It has become increasingly apparent that the current administration is trying to force their anti-crypto agenda at the last minute," stated CyberKongz. "We hope that the new administration puts an end to this unjustness on our industry, but until then we will fight for NFT projects on all chains."

Over the past year, the SEC has filed numerous charges involving NFTs, starting with podcast studio Impact Theory and subsequently suing Stoner Cats 2 LLC for an unregistered NFT offering that raised $8 million. The NFT marketplace OpenSea has also reported receiving a Wells Notice.

The future of ongoing SEC enforcement actions remains uncertain, as Chair Gary Gensler plans to step down on the day of President-elect Donald Trump's inauguration, January 20. Trump has appointed former SEC Commissioner Paul Atkins, who is known to be more supportive of crypto, to lead the SEC.

UPDATE: Dec. 16, 23:40 UTC: Added SEC comment.