NFT collection CyberKongz faces SEC charges over smart contract and gaming concerns
NFT collection CyberKongz faces SEC charges over smart contract and gaming concerns
CyberKongz, a prominent NFT collection, announced on Monday that it has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC), signaling potential enforcement action against the project. This notice comes after two years of discussions with the SEC regarding the intersection of gaming, blockchain, and smart contracts.
The SEC alleges that CyberKongz’s integration of ERC-20 tokens with its blockchain gaming ecosystem may violate securities laws. The enforcement team reportedly expressed concerns that projects combining tokens and gaming mechanics must register those tokens as securities.
CyberKongz criticized the SEC’s stance, particularly its inability to distinguish between "primary sales" and "contract migrations," calling it a major hurdle for clear regulatory pathways. In their statement, the project voiced frustration over what it perceives as an anti-crypto agenda by the current administration.
This marks a continuation of the SEC’s scrutiny of NFTs, following enforcement actions against projects like Stoner Cats and Impact Theory. NFT marketplace OpenSea has also disclosed receiving a Wells Notice earlier this year.
The fight for NFT regulatory clarity
CyberKongz emphasized its commitment to defending NFT projects and called for fairer regulations. “We hope the new administration will end this unjust treatment of the crypto industry, but until then, we will fight for projects across all chains,” the team stated.
The timing of the Wells Notice is notable, as SEC Chair Gary Gensler has announced his resignation, effective Jan. 20, 2025, coinciding with President-elect Donald Trump’s inauguration. Trump’s pick for SEC chair, former Commissioner Paul Atkins, is expected to take a more crypto-friendly approach.
CyberKongz’s case highlights the ongoing tension between the SEC and the crypto industry over the regulatory classification of NFTs and tokens. The outcome could shape the future of NFT projects, as creators and investors await clearer guidelines under new SEC leadership.
But Eric Trump promises a favorable future for cryptocurrencies during Trump’s presidency, so similar situations may become less frequent in the future.
