CyberKongz Cleared by SEC After Two-Year Investigation
1min read Ethereum NFT and gaming project CyberKongz announced on Tuesday that the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into the project. This development adds to the growing list of concluded investigations by the regulator under the current administration.
The project, which had been in contact with the SEC for at least two years, received a Wells notice from the regulator in December. A Wells notice informs recipients that the SEC is considering enforcement action against them. However, the investigation has now ended without any findings or enforcement actions.
CyberKongz expressed relief and pride in a post on X (formerly Twitter), stating, “After years of litigation, unjust allegations, crippling legal fees, and the biggest hurdle we could possibly encounter—we are free. 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 CyberKongz was primarily due to the use of its BANANA token, alongside a blockchain game and the project’s Genesis Kongz contract migration in 2021. The regulator had interpreted these actions as a token sale, which raised concerns within the Web3 gaming industry.
CyberKongz called the SEC’s token discourse “very concerning rhetoric,” which could have major implications for the entire Web3 gaming industry. The project’s leadership believes that this result will provide clarity to other projects building in the Web3 gaming space.
Pseudonymous CyberKongz creator and artist Myoo stated on X, “We have taken some hard hits; but ultimately we have come through the other side—stronger and more determined than ever. 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 recently. 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. Additionally, NFT marketplace OpenSea had its investigation dropped by the Commission in late February.
CyberKongz launched its genesis NFT collection on Ethereum in 2021. The project has since expanded to include multiple companion collections, including one on Ethereum gaming sidechain Ronin, where it migrated its Play & Kollect game in 2023.
