CyberKongz defends itself for the NFT industry

CyberKongz, a game-based nft project, has received a Wells Notice from the US Securities and Exchange Commission, raising concerns about its ERC-20 token and blockchain gaming integration, indicating that There could be a possible legal battle on the cards.

The team said they were “extremely disappointed by the approach the SEC has taken” in the Dec. 16 x release, referring to Well's notice, a formal warning from the SEC about potential enforcement. They also vowed to fight back, arguing that the outcome could have major consequences for the web3 gaming and nft sectors.

The SEC has expressed some concern about CyberKongz's combination of its ERC-20 card with your blockchain based game. The SEC Enforcement Division argues in the CyberKongz case that this setup constitutes a security that must be registered, much like the stance it took against Ripple. This position, the project argued, highlights the lack of understanding of blockchain technologies and would create a dangerous precedent throughout the web3 gaming industry.

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The SEC's concerns relate to its view that the migration of the 2021 Genesis Kongz contract was a primary sale. CyberKongz said this was a baffling interpretation of smart contracts and accused the regulator of failing to make a distinction between technical processes and actual token sales.

CyberKongz stated that their team has been under the microscope for the past 2 years and has suffered silently during this period. With a small team and no prior capital raises or massive treasuries, the project will now attempt to challenge the SEC's position to push for clearer rules in the digital asset space.

The statement also sought to place blame on the current administration, claiming that its “anti-crypto agenda” had damaged the entire blockchain industry, and expressed hope for a new direction under the next administration. CyberKongz also expressed solidarity with industry leaders, including Coinbase's Brian Armstrong, OpenSea's Devin Finzer, and Uniswap Labs' Hayden Adams, who are also facing regulatory pressure from the SEC.

“It has become increasingly evident that the current administration is trying to impose its anti-crypto agenda at the last minute. We hope that the new administration will put an end to this injustice.”

CyberKongz is x.

By treating tokens as securities, the SEC seeks to subject them to stricter regulatory scrutiny and compliance with existing financial regulations, making it mandatory for projects to register and provide disclosures similar to those of traditional financial instruments. Critics They say this approach stifles innovation and overlooks the decentralized nature of blockchain technologies.