NFT Platform CyberKongz Received a Wells notice from SEC

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Web3 Gaming at Risk? NFT Platform CyberKongz Received a Wells notice from SEC

Written by Aaron S.,

Editor-In-Chief

Last Updated: December 17, 2024

Key Takeaways

The SEC’s Wells notice to CyberKongz raises concerns about Web3 gaming tokens needing to register as securities;
CyberKongz denies wrongdoing, clarifying its 2021 Genesis Kongz event was a contract update, and vows to defend its position;
CyberKongz remains resilient, gaining support from Axie Infinity's co-founder and calling for fair treatment of NFTs.

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Web3 Gaming at Risk? NFT Platform CyberKongz Received a Wells notice from SEC

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The US Securities and Exchange Commission (SEC) has issued a Wells notice to CyberKongz, a non-fungible token (NFT) platform.

In an X post on December 16, CyberKongz shared that the SEC questioned the use of an ERC-20 token tied to a blockchain game.

The regulator argued that such tokens must be registered as securities before release. CyberKongz believes this discourse could impact the entire Web3 gaming sector and has promised to oppose it.

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The SEC's focus on CyberKongz seems to center on its 2021 “sale” of Genesis Kongz NFTs. However, CyberKongz clarified that the event was not a primary sale but a contract migration.

CyberKongz emphasized that it has mostly operated without external funding and has relied on limited resources to grow.

Despite the pressure, CyberKongz remains determined. He stated:

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.

The platform received support from Jihoz Zirlin, co-founder of Axie Infinity AXS $1.01 , who expressed confidence that future leadership will bring fairer treatment for NFT projects.

It revealed that CyberKongz has been handling SEC inquiries for two years, describing the process as "suffering in silence". The company also criticized the decision, calling it a last-minute effort by the current administration to slow down the NFT industry.

While CyberKongz pushes back against the SEC, other NFT cases have also made headlines. Shaquille O’Neal recently faced a lawsuit over allegations of misleading promotion for the Astrals NFT project. How did he settle the $11M case? Read the full story.