SEC Targets Another Crypto Firm, Issues Wells Notice to Immutable

SUMMARY

Immutable received a notice from the SEC regarding the sale of its IMX tokens in 2021.
The web3 firm criticized the SEC for “regulation by enforcement” and condemned the lack of regulatory clarity.

The U.S. Securities and Exchange Commission (SEC) recently sent a Wells Notice to Web3 game company Immutable about its IMX tokens. This notice came after the company’s first contact with the SEC, referencing statutory provisions but providing no specifics regarding the investigation’s nature. Immutable voiced concern about the SEC’s continued indiscriminate classification of tokens as securities. They believe the allegations mostly center on IMX’s 2021 listing and private sales, including a pre-launch acquisition by Huobi Ventures Blockchain Fund. Following this announcement, the IMX token fell more than 13%, reaching $1.16.

A Wells Notice is a notification sent to people or businesses about a possible lawsuit after an SEC investigation. The SEC has already issued similar notifications to several well-known cryptocurrency companies, including Coinbase and Ripple. Additionally, separate notices went to Immutable’s parent firm, the Digital Worlds Foundation, and its CEO. Although the DOJ has not sued the firm, it stated that it is aware of similar inquiries from the DOJ.

Immutable criticized the SEC’s strategy and expressed skepticism about the agency’s attempts to bring transparency to the sector. The company stressed that the IMX token is not a security and is ready to defend its stance against what it perceives as an enforcement strategy lacking openness and direct communication. They argue that this regulatory framework hampers the industry’s development and innovation.

Immutable highlighted how crucial digital ownership is to the gaming business, which has about 3.1 billion users worldwide. They expressed their belief in the potential of blockchain technology to enhance the internet and promised to actively defend their rights and those of the larger crypto community if needed. The company thinks that a strong defense against the SEC’s actions is essential for creating clearer rules for the crypto industry moving forward.