CyberKongz receives “concerning rhetoric” in Wells notice from the SEC

• CyberKongz said it has been “suffering in silence for the last two years” since being contacted by the US SEC
• The SEC has an issue with the “sale” of its Genesis Kongz NFTs in April 2021; however, CyberKongz said this was a contract migration and not a token sale
• CyberKongz said the Biden administration is attempting last-minute enforcement action

CyberKongz, a non-fungible token (NFT) platform, has received a Wells notice from the US Securities and Exchange Commission (SEC).

In a post on X, CyberKongz said that they have “been suffering in silence for the last two years, ever since we first received contact from the SEC,” adding that it had received some “concerning rhetoric” that an ERC-20 token can’t be issued with a blockchain game without being registered as a security.

“This discourse would have major implications for the entire web3 gaming industry, and we will defend against this stance for the wider space,” wrote CyberKongz.

CyberKongz has received a Wells Notice from the SEC.

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.

We have been suffering in silence for the last… pic.twitter.com/lc6hyzUPb0

— CyberKongz (@CyberKongz) December 16, 2024

By issuing a Wells notice, the SEC believes there may be securities law violations and is preparing to take action against the platform. One of the issues the SEC has with CyberKongz is the “sale” of its Genesis Kongz NFTs in April 2021. According to CyberKongz, this was a contract migration and not a 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?”

CyberKongz added that the Biden administration is attempting enforcement action at the last minute, adding:

“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.”

Earlier this year, crypto exchange Coinbase received a Wells notice from the SEC followed by OpenSea, an NFT marketplace, and blockchain gaming platform Immutable.