The U.S. Securities and Exchange Commission (SEC) has sent a Wells notice to CyberKongz. This means the SEC plans to take action against the NFT project.

CyberKongz recently announced this news and stated they will “stand up and fight.” They’ve faced challenges for the past two years since first hearing from the SEC. During this time, CyberKongz claims the SEC has shown a lack of understanding about blockchain technology. This has led to unfair accusations and misinformation.

CyberKongz is rooted in gaming. They expressed concern about the SEC’s stance that a token (ERC-20) cannot exist alongside a blockchain game without being registered as a security. This view could have serious implications for the entire web3 gaming industry. CyberKongz is committed to defending against this interpretation for the sake of the broader community.

In August, the SEC also issued a Wells notice to OpenSea, claiming that the NFTs on their platform are securities.

CyberKongz criticized the SEC’s notice for what they see as a confusing take on smart contracts. One major issue revolves around the “sale” of Genesis Kongz back in April 2021. CyberKongz insists this was actually a contract migration. They question how the SEC can distinguish between a primary sale and a contract migration. This raises concerns about the future of clear regulations in the industry.