Blockchain gaming platform Immutable has received a Wells Notice from the United States Securities and Exchange Commission (SEC) shortly after the company’s first meeting with the regulator.
The platform has vowed to fight any potential action from the regulator, adding it believes the notice could be regarding the listing and private sale of IMX tokens in 2021.
Immutable Receives Wells Notice
A Wells Notice is a form of communication from the United States Securities and Exchange Commission that informs the firm that agency staff could potentially recommend enforcement action against the company. According to a statement issued by Immutable, the firm received the Wells Notice within hours of meeting with the regulator. The firm added that a notice, there are months of conversations between the SEC and company counsel. However, in Immutable’s case, it was told in its first interaction with the SEC that a notice would be issued.
“Prior to the issuance of a Wells notice, there are often multiple months of interviews and conversations between company counsel and the SEC so the SEC can fully understand the situation. Instead, in our very first interaction with the SEC, we were told a Wells notice would be issued to the company within the week. We then received it within hours.”
Possible Reasons
Immutable said it got on a brief call with the regulator after it had issued the Wells Notice. On the call, the SEC alleged a 2021 blog that stated a pre-launch investment made in the IMX token for $0.10, which was issued a pre-100:1 split, was inaccurate and implied no exchange of value between parties.
“Once again, the SEC is incorrect: there was a real consideration, which they would have learned through a constructive dialogue with the company.”
However, the company stated the notice included scarce details. It also added that it was aware of related inquiries but not any proposed legal action from the Department of Justice (DOJ). Meanwhile, the SEC declined to comment, with a spokesperson stating,
“The SEC does not comment on the existence or nonexistence of a possible investigation.”
SEC Targeting Crypto Firms
Multiple crypto firms have received Wells Notices over the past year. These include Crypto.com, Opensea, and Robinhood. Additionally, the SEC has brought enforcement action against Kraken, Coinbase, and other prominent firms. The regulator, under the leadership of Gary Gensler, has consistently stated crypto firms must register with the agency, follow its rules, and protect investors. However, crypto firms have pushed back, arguing that registration with the agency is impossible partly because the rules were made for traditional financial entities, not digital asset companies. On its part, Immutable stated that IMX was not a security and, if needed, the company would argue its case in court.
“We are confident in our position, in the value digital ownership can bring to 3.1 billion gamers across the world, and in the power of blockchain to create a better internet. If required, we will fight for these rights and those of our industry vigorously.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
