CyberKongz NFT Project Faces Potential SEC Charges

The team behind the NFT collections CyberKongz has announced that the U.S. Securities and Exchange Commission (SEC) may bring charges against them.

CyberKongz has received a Wells Notice from the SEC.

We are extremely disappointed at the approach the SEC has taken towards us, but we are going to stand up and fight for a brighter future that holds more clarity for NFT projects.

We have been suffering in silence for the last… pic.twitter.com/lc6hyzUPb0

— CyberKongz (@CyberKongz) December 16, 2024

The project has received what is known as a Wells Notice. This form is used by the regulator to officially warn the recipient that enforcement actions may be taken against them. It does not necessarily mean that an investigation will be opened.

“We are extremely disappointed at the approach the SEC has taken towards us, but we are going to stand up and fight for a brighter future that holds more clarity for NFT projects,” the CyberKongz statement reads. 

According to the developers, SEC specialists began contacting them two years ago and during this time have shown a “complete lack of understanding of blockchain technology.”

The SEC believes that the project’s ERC-20 standard gaming token should have been registered as a security. The regulator’s claims also concern the alleged initial sale of Genesis Kongz in April 2021, although developers noted that it was actually a smart contract migration.

“CyberKongz is a small team, we have never raised capital and do not have a large treasury, but we have decided to take on this fight because we have always believed in the industry’s prospects. […] Now we will fight for a clearer regulatory path for digital blockchain assets,” the project stated.

According to Crypto Slam, over the past 30 days, the trading volume of the flagship CyberKongz collection amounted to $296,099. At its peak in October 2021, the daily figure exceeded $7 million.

Earlier, NFT Evening specialists concluded in a study that 96% of NFTs are “dead.”