SEC Plans Legal Action Against Web 3 Firm Immutable

The US Securities and Exchange Commission (SEC) plans to sue Web 3 gaming firm Immutable. According to the company, the regulator issued a Wells Notice to the company, adding it to a growing list of crypto firms targeted in recent years.

The Wells Notice, a formal communication used to notify companies of potential regulatory action, reportedly came shortly after Immutable’s first interaction with the SEC.

In a statement, Immutable faulted the regulator’s approach, stating that the notice was issued hours after an initial meeting with the regulator. According to the company, the SEC is concerned with the listing and private sales of Immutable’s IMX tokens in 2021, although the agency has yet to offer detailed findings on the alleged violations.

SEC Targets Immutable

Immutable is one of many crypto companies advocating for clearer regulatory guidelines. It argued that the SEC’s current approach forces companies to guess how to comply with securities laws. The company claims it has already spent millions in legal fees to ensure compliance yet still faces regulatory scrutiny.

“We’re frustrated to share that the SEC recently sent us a Wells Notice, which non-specifically alleges violations of securities law and alleged misrepresentations by the company,” the company mentioned in a statement. “With this action, the SEC is continuing to indiscriminately assert that tokens are securities.”

Immutable has received a Wells notice from the SEC, the latest in their de facto policy of regulation by enforcement. We received this within hours of our first ever conversation, on a timeline clearly accelerated to land before an election.Sadly, stories like this are becoming…

Immutable’s CEO, alongside Digital Worlds Foundation, which issued the IMX token, also received individual Wells Notices. In response, Immutable noted that its mission of building a new property rights structure in gaming aligns with public interests, voicing confidence in the legality of its operations and the value of blockchain for Web 3 development.

Calls for Clear Crypto Regulations

Many in the industry argue that the SEC’s approach creates unnecessary obstacles for crypto companies, Coindesk reported. Immutable’s statement highlights this concern, suggesting that the SEC’s investigation stems from “insufficiently researched and factually incorrect allegations,” citing a 2021 blog post as an example.

Immutable's experience reflects broader sentiments across the crypto industry, as several firms have expressed frustration over the SEC’s tactics. Companies like Ripple and Grayscale have successfully challenged the SEC’s actions in court, with Ripple recently securing a victory as a judge ruled that its XRP token is not a security.