Ethereum NFT and gaming project CyberKongz said Tuesday that the U.S. Securities and Exchange Commission (SEC) has ended its investigation into the project, adding to the growing list of concluded investigations from the regulator since the shift to a more crypto-friendly administration under President Donald Trump.
The project, which said that it had been in contact with the Commission for at least two years, announced the receipt of a Wells notice from the regulator in December. A Wells notice informs recipients that the SEC is considering taking enforcement action against them, but now that investigation has ended without findings or enforcement.
An SEC spokesperson declined comment when reached by Decrypt. The regulator has consistently declined comment when firms have reported closed investigations in recent weeks.
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“After years of litigation, unjust allegations, crippling legal fees, and the biggest hurdle we could possibly encounter—we are free,” the project posted on X (formerly Twitter). “This is an extremely proud moment for CyberKongz. We are a small, passionate, and creative Web3 team that elected to fight this battle for the betterment of Web3.”
The SEC’s scrutiny of the project stemmed from the use of its BANANA token, alongside a blockchain game and the project’s Genesis Kongz contract migration in 2021—which regulators had apparently interpreted as a token sale.
Given the popularity of projects launching tokens alongside blockchain games, CyberKongz called the SEC’s token discourse “very concerning rhetoric,” which could “have major implications for the entire Web3 gaming industry.”
Now, though, the project’s leadership believes this result will provide clarity to projects building in the Web3 gaming space.
“We have taken some hard hits; but ultimately we have come through the other side—stronger and more determined than ever,” said pseudonymous CyberKongz creator and artist Myoo on X. “The next chapter involves going back to our roots and doing what Kongz does best.”
CyberKongz is not the only NFT-adjacent crypto project to announce a “victory” against the SEC of late. In early March, Bored Ape Yacht Club creator Yuga Labs announced that its investigation by the SEC had been closed, calling it a “huge win” for NFTs.
SEC Serves NFT Project CyberKongz With Wells Notice Citing Securities Violations
The U.S. Securities and Exchange Commission has issued a Wells Notice to NFT gaming project CyberKongz, marking the latest regulatory probe into an entity of its type. “The SEC’s Division of Enforcement have approached us with very concerning rhetoric that you can not have a token (ERC-20) in tandem with a blockchain game without registering it as a security,” the project said in a statement posted to X on Monday. A Wells Notice informs recipients that the regulator is thinking of undertaking en...
Furthermore, NFT marketplace OpenSea also had its investigation dropped by the Commission in late February. However, as recently as last week, it was still seeking clarity from the regulator about NFT marketplace rules.
CyberKongz launched its genesis NFT collection on Ethereum in 2021. The project has since spawned multiple companion collections, including one on Ethereum gaming sidechain Ronin, where it migrated its Play & Kollect game in 2023.
Once boasting sales above $300,000, the project’s flagship collection now starts at a price of $5,447 worth of Ethereum, according to NFT Price Floor.
Edited by Andrew Hayward