**Immutable Faces SEC Wells Notice for Alleged Securities Law Breaches**
Immutable has revealed that the U.S. Securities and Exchange Commission (SEC) is contemplating enforcement actions against the blockchain gaming company for potential violations of securities regulations. In a statement released on Thursday, the firm disclosed that it had received a Wells notice, which alleges that it has breached securities laws and issued misleading statements. The company criticized the SEC for what it perceives as a blanket assertion that all tokens are securities.
The focus of the SEC’s inquiry, as stated by Immutable, pertains to the listing and sales of its IMX token conducted in 2021. Immutable expressed confidence in its position, asserting, “Despite the SEC’s indiscriminate claims that tokens throughout the industry are securities, we firmly believe that the IMX token does not qualify as one.”
**Immutable Criticizes SEC for Brief Wells Notice Following Initial Meeting**
In addition, Immutable pointed out that Wells notices typically emerge after in-depth discussions between a company’s legal representatives and the SEC, allowing for comprehensive evaluation. However, in this instance, the company received the notice right after its inaugural meeting with the SEC. It characterized the notice as lacking substance, containing fewer than 20 words of significant explanation.
**$426 Million in Legal Defense Costs Reflect Industry Challenges**
The SEC has issued Wells notices to numerous cryptocurrency firms, primarily charging them with offering unregistered securities. The SEC contends that the tokens provided by these companies satisfy the legal criteria for securities, which necessitates registration with the SEC prior to public sale.
Earlier this month, Crypto.com initiated legal action against the SEC after receiving a Wells notice, arguing that the regulatory body exceeded its authority. A recent report from the Blockchain Association indicated that the SEC has undertaken 104 enforcement actions against crypto firms through 2023, resulting in approximately $426 million in legal defense expenses for member companies.
Immutable has identified this trend as a pressing concern, emphasizing the urgent necessity for clear compliance regulations within the industry. It noted that startups are compelled to allocate millions toward legal battles merely to sustain their operations.
