In a significant development for the crypto space, the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into the NFT gaming initiative, CyberKongz. This decision comes four months after the project received a Wells notice concerning its use of an ERC-20 token.
CyberKongz recently announced the closure of the probe, hailing it as a victory for the broader Web3 industry. The project, known for its non-fungible tokens (NFTs) and gaming elements, revealed plans for a significant rebranding following this regulatory outcome.
“After years of litigation, unjust allegations, crippling legal fees, and the biggest hurdle we could possibly encounter – we are free,” the project stated. “This is an extremely proud moment for CyberKongz.”
[pic.twitter.com/kU1QOnp4wN]
The team expressed that this result could offer much-needed clarity for other ventures operating at the intersection of blockchain technology, Web3 gaming, and NFTs. “We are certain this result will provide clarity to many projects innovating with blockchain technology, pushing the boundaries of Web3 gaming, and ultimately showcasing the beauty of NFTs,” they added.
The investigation stemmed from concerns raised by the SEC last December via a Wells notice. The regulator questioned whether CyberKongz’s integration of an ERC-20 token constituted an unregistered security offering, an issue central to many enforcement actions against crypto firms like Ripple and Helium.
CyberKongz contested the SEC’s position from the outset, expressing disappointment with the agency’s approach and arguing that the case held significant implications for the future of Web3 gaming and digital collectibles. The project maintained that the SEC misunderstood the technical application of smart contracts versus actual token sales, particularly regarding a 2021 contract migration.
This development occurs amidst a backdrop where the SEC, potentially influenced by the current Trump administration, has reportedly withdrawn from several high-profile legal battles involving major crypto players such as Kraken, Coinbase, and Consensys.