The US Securities and Exchange Commission (SEC) has issued a “Wells Notice” to Immutable, a blockchain gaming platform. It joins a list of prominent Web3 companies targeted by the agency’s regulation-by-enforcement approach.
Following the news, the price of IMX token declined by more than 14% in the last 24 hours, falling below $1.40.
Abrupt Wells Notice to Immutable
In a blog post on November 1st, Immutable expressed frustration over receiving a Wells Notice from the SEC, which, according to the platform, “non-specifically” alleges securities law violations and possible misrepresentations.
Typically, the SEC engages in several months of discussions with a company before issuing a Wells Notice, allowing for detailed exchanges and a clearer understanding of the situation. However, in the case of Immutable, this standard process was skipped entirely.
Immutable reported that in its first interaction with the SEC, the company was informed it would receive a Wells Notice within the week. However, it arrived within hours and lacked the in-depth explanation typically expected in such cases. Immutable claimed that the notice offered only minimal detail, with fewer than 20 words explaining the allegations, which the platform speculates could be regarding its IMX token listing from 2021.
This abrupt action was taken with almost no direct communication or context, which led Immutable to question the SEC’s intentions, especially given the timing near the US election. It is important to note that this notice often precedes formal enforcement action.
“Despite the SEC indiscriminately claiming that tokens across the industry are securities, we are confident the IMX token is not. If the manner of providing clarity to the industry is by winning against this attempted regulation by enforcement, then Immutable is happy to do so.”
Immutable Prepared to Fight Back
The latest development places Immutable alongside industry giants like Coinbase, Consensys, Ripple, OpenSea, Uniswap Labs, Bittrex, and Crypto.com, which have received a Wells Notice from the securities regulator. Several players have pushed back, arguing against the regulator.
Immutable also asserted that it remains well capitalized with a large war chest to build for the future of gaming and would fight back if needed.
