Immutable pledges to fight after SEC ‘sprayed and prayed’ Wells notice

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Blockchain gaming platform Immutable says it received a Wells notice from the SEC over alleged securities law violations within "hours" of its first interaction with the regulator.

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Immutable pledges to fight after SEC ‘sprayed and prayed’ Wells notice

Crypto gaming platform Immutable has pledged to fight any potential enforcement action from the United States Securities and Exchange Commission after receiving a Wells notice from the regulator.

In a Nov. 1 statement, Immutable said that while the SEC did not specify its allegations in the notice, it believes the agency’s claims are targeting the “listing and private sales” of its native IMX token in 2021.

Multiple firms had received Wells notices this year, including OpenSea, Crypto.com, and Uniswap.

The gaming platform said it engaged in a ten-minute call with the SEC shortly after it had already issued the Wells notice.

On the call, the SEC alleged a 2021 Immutable blog post stating a pre-launch investment made in the IMX token at a price of $0.10, which was issued at a “$10 pre-100:1 split” was inaccurate and implied there was no exchange of value between the parties.

“Once again, the SEC is incorrect: there was real consideration, which they would have learned through a constructive dialogue with the company,” said Immutable in response.

A Wells notice is a formal letter issued by the SEC that informs an entity that the regulator is considering an enforcement action. A Wells notice typically indicates that the SEC has completed an investigation and has discovered evidence of possible violations of the securities laws.

Additionally, Immutable shared that it was extremely unhappy with the way the regulator issued the Wells notice, saying the notice was sprung upon them with very little warning.

“Prior to the issuance of a Wells notice, there are often multiple months of interviews and conversations between company counsel and the SEC, so the SEC can fully understand the situation,” said Immutable.

“Instead, in our very first interaction with the SEC, we were told a Wells notice would be issued to the company within the week. We then received it within hours.”

In response to a potential enforcement action, Immutable said it was “confident in its position” and would happily fight back against it.

“Despite the SEC indiscriminately claiming that tokens across the industry are securities, we are confident the IMX token is not,” wrote Immutable in its statement.

The gaming platform added that the SEC had “sprayed-and-prayed” its legal action by also issuing Wells notice to CEO James Ferguson and to the Digital World’s Foundation, the parent entity of the issuer of its native IMX token.

The price of the platform’s IMX token plummeted as much as 9% in one hour following the SEC’s actions and is currently trading for $1.20, according to TradingView data.