The SEC "enters" the crypto gaming field, Immutable chooses to stand firm after receiving a Wells notice
Regardless of whether the SEC's charges will continue to advance, Immutable's strong stance demonstrates that they are well-prepared.Author: Zen, PANews
"We will fight for builders, creators, gamers, and digital ownership."
On November 1, Web3 gaming infrastructure company Immutable announced that it had received a "Wells Notice" from the U.S. Securities and Exchange Commission (SEC), which ambiguously accused it of violating securities laws and making false statements.
Following the announcement, Immutable's ecosystem token IMX fell below $1.30. According to CoinGecko data, as of November 2, the price of the IMX token was approximately $1.10, with a fully diluted market cap of about $2.17 billion, still firmly holding the top position in the Web3 gaming ecosystem.
Hasty Accusations Lacking Details
"With the latest action against Immutable, the SEC's overreach has extended into the gaming sector." According to Immutable, during their first interaction with the SEC, they were informed that the Wells Notice would be issued within a week. However, they received the notice just a few hours later. In the past, there would typically be months of discussions and communications between the company's legal counsel and the SEC before a Wells Notice was issued, allowing the SEC to fully understand the situation. The timing of this accusation, just before the U.S. elections, was indeed unexpected for Immutable.
More importantly, the SEC seems to have only cited general statutory provisions in the notice, lacking specific details, and Immutable mockingly stated that the substantive explanation in the notice was even less than 20 words. As more companies in the cryptocurrency industry face pressure from U.S. regulators, criticism of the SEC and its chairman Gary Gensler has never ceased. In response to the SEC's somewhat hasty and unprepared accusations, Immutable made a strong rebuttal in its announcement: "Although the SEC indiscriminately claims that tokens across the entire industry are securities, we are confident that the IMX token is not a security."
Regarding the allegations of false statements, Immutable believes the SEC's claims pertain to the listing and private sale of IMX in 2021. In a phone call 10 minutes after the Wells Notice was issued, the SEC referenced a blog post released by Immutable during that period and implied that the claimed investment by Huobi Ventures prior to the listing of IMX did not actually occur. Immutable strongly criticized this, stating, "The SEC has made another mistake: they could have learned this through constructive dialogue with the company."
NFTs Not Mentioned May Pose Potential Risks
In addition to tokens, whether NFTs fall under the category of securities has also been a contentious issue and a focus of regulatory scrutiny in recent years. At the end of August this year, OpenSea CEO Devin Finzer announced that he had received a Wells Notice from the SEC, suggesting that the NFTs on the platform might be classified as securities, threatening to sue OpenSea. Currently, in addition to applications in digital art and collectibles, another major application area for NFTs is in-game items, which is also part of Immutable's gaming business.
As one of the largest gaming ecosystems, Immutable has launched flagship games such as "Gods Unchained" and "Guild of Guardians." In the second quarter of this year, with the launch of "Guild of Guardians" and the release of the "Main Quest," which boasts rewards exceeding $50 million and claims to be the largest Web3 gaming mission and rewards program in history, its ecosystem players officially surpassed one million, doubling in just May alone. Related reading: “Ecosystem players surpass one million, a look at the 13 games currently promoted by Immutable”
According to DappRadar data, the total market value of NFT assets in the collectible card game "Gods Unchained" reaches $1.8 billion. Based on the SEC's unexpected enforcement style, it seems plausible that after initially classifying digital artworks as securities, they may also classify NFT-based gaming items as securities after "entering" the gaming sector.
Accusations May Not Hold Up?
The rush to enforce against Immutable before the presidential election has led some to believe that this is evidence of the SEC under Gary Gensler being "on its last legs."
With only two and a half months left until the new president takes office on January 20, Gary Gensler may no longer serve as the chairman of the agency. On one hand, Republican candidate Trump, who has frequently signaled goodwill toward the crypto industry, has outright promised to remove Gensler on his first day in office (not discussing here whether he has the corresponding legal authority and feasibility); on the other hand, according to crypto media Unchained report, a close source from Harris's campaign team indicated in an interview that Harris's transition team is also reviewing potential successors.
In summary, there is a high likelihood that Gary Gensler will be replaced in the new presidential administration, and related investigations may be completely abandoned. Austin Campbell, CEO of blockchain-based digital payment company WSPN, stated: "Leadership changes could have a significant impact on the ongoing investigations by the U.S. Securities and Exchange Commission." He added, "After such changes, investigations may be modified, reprioritized, or even abandoned."
Regardless of whether the SEC's accusations will continue to progress, Immutable's strong stance indicates that they are well-prepared: "Immutable remains well-capitalized, with ample funds to prepare for the future of gaming. The SEC's excessive intervention and political agenda will not stop us; they will not stop this industry; they will not stop the inevitability of digital ownership."
