Web3 gaming firm Immutable is facing a potential legal challenge from the U.S. Securities and Exchange Commission (SEC) regarding its sale of the IMX token.
**Regulatory Actions by Enforcement**
On November 1, Immutable disclosed that it had received a Wells notice from the SEC, which alleges unspecified violations of securities laws and misrepresentations related to the company. Immutable believes these allegations pertain to the listing and private sales of IMX tokens conducted in 2021.
The company has characterized the notice as a manifestation of the SEC’s “de facto policy of regulation-by-enforcement,” indicating that a lawsuit could be on the horizon. Despite this challenge, Immutable remains committed to developing products and services for gamers, although it expressed concern over the disruptions the SEC’s methods are causing to its business operations.
As previously reported by Bitcoin.com News, the SEC has employed a regulation-by-enforcement strategy against various blockchain and Web3 firms over the past year. In some cases, the courts have responded critically; one U.S. judge referred to a specific SEC ruling as “arbitrary and capricious.” Nevertheless, the SEC has continued this strategy, recently targeting Opensea in late August.
With the Wells Notice issued to Immutable, this marks a significant moment as it is the first time a gaming company has come under the SEC’s scrutiny.
“With this recent action against Immutable, the SEC has extended its reach into the gaming sector. We are also aware of related inquiries, but no formal or proposed actions have been initiated by the Department of Justice. Like many companies in the crypto space, Immutable has invested millions in compliance and legal governance. We advocate for regulatory clarity, yet it seems that certain parts of the SEC are disinclined to engage in productive discussions,” Immutable stated.
**Confusion from SEC’s Strategy**
The gaming company further expressed that the SEC’s vague and inconsistent regulatory approach is generating confusion among businesses, stifling innovation and complicating compliance efforts.
Reports indicate that the Wells Notice was issued shortly after the company’s legal counsel first interacted with the SEC. The U.S. regulator is said to have taken an expansive approach by serving Wells notices not only to Immutable’s CEO but also to the Digital Worlds Foundation.
Immutable has called on the SEC to establish “clear and fit-for-purpose” regulations and guidelines for the industry. The company also urged the regulator to adopt a fair process and engage in constructive dialogue before pursuing enforcement actions. Immutable cautioned that the industry would continue to resist any unfavorable regulatory approaches.
