Cryptocurrency gaming platform Immutable has pledged to fight potential enforcement action by the U.S. Securities and Exchange Commission after receiving a Wells notice from the regulator.
Immutable said in a Nov. 1 statement that while the SEC did not specify the allegations in the notice, it believed the agency’s allegations were aimed at “listing and private sales” of the underlying IMX token in 2021.
source: immutability
Several companies have received Wells notices this year, including OpenSea, Crypto.com, and Uniswap.
The gaming platform said it already had a 10-minute call with the SEC shortly after issuing the Wells notice.
In the call, the SEC argued that a 2021 Constant blog post that stated the pre-launch investment in IMX tokens, issued at “$10 prior to the 100:1 split” at $0.10, was inaccurate and implied nothing. Exchange of value between parties.
“Once again, the SEC was wrong. There were practical considerations that would have been learned through constructive dialogue with the company,” Immutable said.
A Wells Notice is a formal letter issued by the SEC to notify an entity that the regulator is considering enforcement action. A Wells notice generally indicates that the SEC has completed its investigation and discovered evidence of possible securities law violations.
Immutable also said it was very dissatisfied with the way the regulator issued the Wells notice, saying it occurred with little warning.
“There are often months of interviews and conversations between company attorneys and the SEC before a Wells notice is issued, allowing the SEC to fully understand the situation,” Immutable said.
“Instead, in our first interaction with the SEC, we were told that a Wells notice would be issued to the company within a week. We received it within hours.”
As for potential enforcement action, Immutable said it was “confident in its position” and willing to fight it.
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“Despite the SEC’s indiscriminate claims across the industry that tokens are securities, we are confident that the IMX token is not,” Immutable wrote in a statement.
The gaming platform added that the SEC had “distributedly prayed” for legal action by also issuing Wells notices to CEO James Ferguson and Digital World’s Foundation, the parent company of the issuer of the underlying IMX tokens.
According to TradingView data, the price of the platform’s IMX token plunged 9% in the hour following the SEC’s action and is currently trading at $1.20.
The price of IMX plummeted following news of Wells’ announcement. Source: TradingView
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