Immutable Hit with SEC Wells Notice for Alleged Securities Law Violations
Immutable announced that the US SEC is considering enforcement action for potential securities violations against the blockchain gaming firm.
The company said in a Thursday statement that itreceived a Wells notice, accusing it of violating securities laws and making misleading statements. “With this action, the SEC is continuing to indiscriminately assert that tokens are securities,” it said.
According to the company, the regulator is targeting its 2021IMXtoken listing and sales.
“Despite the SEC indiscriminately claiming that tokens across the industry are securities, we are confident the IMX token is not,” Immutable said.
Immutable Calls Out SEC for Issuing Brief Wells Notice After Initial Meeting
Further, Immutable added that a Wells notice usually follows extensive discussions between a company’s legal team and the SEC. This process allows for a thorough evaluation.
However, it received a notice immediately after its first meeting with the SEC. The company described it as containing fewer than 20 words of meaningful explanation.
$426M in Legal Defense Costs Highlight Industry Strain
The SEC has issued Wells notices to several crypto entities, primarily accusing them of selling unregistered securities. The SEC argues that the tokens offered by these entities meet the legal definition of securities, which requires registration with the SEC before public sale.
Earlier this month, Crypto.comsued the SEC after receiving such a notice, claiming it overstepped its regulatory authority.
The Blockchain Association said in a recent report that the SEC has launched 104 enforcement actions against crypto entities through 2023,costing member companies around $426min legal defense fees.
Immutable addressed this trend as an issue, highlighting the industry’s urgent need for clear compliance guidelines. However, startups are forced to spend millions on litigation just to operate, it said.