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Crypto gaming platform Immutable announced on November 1 that it intends to contest any potential enforcement action from the United States Securities and Exchange Commission (SEC) after the agency issued it a Wells notice.
The SEC’s notice suggests that Immutable may have violated securities laws related to the “listing and private sales” of its native IMX token in 2021. Immutable responded assertively, stating that it was “confident” in its legal stance and prepared to challenge any further regulatory action.
Immutable Aims Constructive Dialogue
Immutable noted the SEC’s surprising approach in delivering the Wells notice, explaining that typical protocol involves multiple discussions with the company’s counsel over several months. Instead, Immutable reported that it received the notice within hours after a brief ten-minute call with the SEC, during which the agency raised questions over a 2021 blog post on the IMX token’s pre-launch investment.
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The SEC questioned a post where the IMX token was offered at a price of $0.10, allegedly implying that no value exchange had occurred. Immutable countered, “Once again, the SEC is incorrect: there was real consideration,” adding that constructive dialogue could have clarified this matter.
A Wider SEC Crackdown on Crypto Tokens?
Immutable’s situation mirrors a growing pattern in the crypto industry. The SEC has been scrutinizing various companies over similar concerns, issuing Wells notices to notable firms like Robinhood, OpenSea, Crypto.com, and Uniswap.
A Wells notice typically signals the end of an SEC investigation and serves as an alert that enforcement action may soon follow. While the SEC has yet to specify charges against Immutable, this enforcement approach underscores its broader stance on crypto tokens, which the SEC has been increasingly identifying as potential securities. Immutable’s statement made it clear that the platform doesn’t see its IMX token as a security, regardless of the SEC’s wider strategy.
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Immutable disclosed that the SEC not only issued a Wells notice to the company but also targeted its CEO, James Ferguson, and the Digital World’s Foundation, the parent entity behind the IMX token. Following this news, IMX’s price took a noticeable dip, plummeting nearly 9% within an hour and trading around $1.20 at the time of publication.
Despite the market reaction, Immutable remains firm in its resolve to fight the SEC’s findings, asserting that the IMX token should not be classified as a security.
