NFT Project CyberKongz Says SEC Issued Wells Notice As Gensler Prepares For Exit

Non-fungible token (NFT) project CyberKongz said it received a Wells notice from the U.S. Securities and Exchange Commission (SEC), becoming the latest in a growing list of blockchain-related firms that have been targeted by the Wall Street regulator ahead of its Chair Gary Gensler's resignation.

CyberKongz is the second known NFT brand to have been targeted by the SEC this year after the regulator issued a Wells notice to NFT marketplace OpenSea, alleging securities laws violations over its sales of NFTs.

NFT Gaming Platform Refuses to Back Down

CyberKongz, which is also a gaming platform, said Monday night it was approached by the SEC "with very concerning rhetoric that you cannot have a token (ERC-20) in tandem with a blockchain game without registering it as a security."

The team argued that the regulatory agency's stance would significantly hurt the entire Web3 gaming segment but that CyberKongz will "defend against this stance for the wider space."

It is unclear when exactly the team received a Wells notice, but it said it has "been suffering in silence for the last two years" after it was first contacted by the SEC.

"Throughout the entire process they have showcased a complete lack of understanding of blockchain technologies that has resulted in unjust accusations and information inaccuracies," the NFT project's team said.

Community Rallies Behind CyberKongz

The team has since been flooded with support from the cryptocurrency community, with many calling out the SEC for its approach toward the NFT industry.

Prominent NFT figure @seedphrase said he felt sorry that CyberKongz had to go through the same struggle that other crypto firms have and are still going through. He called "better understanding and clarity in the government" regarding NFTs.

"A win for CK is a win for everyone. All my support in the fight," said Web3 Dojo founder @andresins.ron.

Many other crypto figures commented on the CyberKongz team's post, wishing them good luck in their "fight for this space."

Gensler SEC Still Hot on Crypto's Heels

Meanwhile, the crypto industry is looking forward to the entry of President-elect Donald Trump into the White House, along with Gensler's resignation on Inauguration Day.

Ahead of CyberKongz's revelation about the Wells notice, Gensler's SEC made a filing to block crypto exchange giant Binance's bid to dismiss a lawsuit from the regulator over the exchange's sales of its BNB token and other tokens.

There are concerns that Gensler, who has been accused by the crypto community of targeting the crypto space since he became the SEC chief, will continue to attack the broader blockchain and crypto space until he finally leaves office on Jan. 20.