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Immutable, an Ethereum Web3 gaming firm, has received a Wells Notice from the United States Securities and Exchange Commission (SEC), according to a statement released on Friday. A Wells Notice is an indication that the SEC is considering filing a lawsuit against a company.
In a blog post, Immutable stated that the SEC served it a sudden Wells notice, which non-specifically alleges violations of securities law and alleged misrepresentations by the company. While not indicated in the notice, Immutable believes the SEC's claims are aimed toward the listing and private sales of IMX in 2021.
Immutable joins Coinbase, Consensys, Ripple, OpenSea, Crypto.com and others that have faced SEC escalations in recent years. With this latest move against Immutable, the SEC’s overreach has expanded into gaming.
Wells Notice too sudden
In an official blog post, Immutable highlighted its frustration that the SEC sent it a sudden Wells Notice shortly after its very first interaction with the agency.
Immutable believes that before the issuance of a Wells Notice, there are often multiple months of interviews and conversations conducted. Rather, in its very first interaction with the SEC, it was told a Wells Notice would be issued to the company within the week.
Immutable added that it instead received the Wells Notice within hours, which simply cited statutory provisions and contained limited meaningful detail about the nature of the investigation — fewer than 20 words of material explanation.
SEC veteran weighs in
The latest move by the SEC has drawn attention from the crypto community, disappointing to many but it was not surprising given the agency's continuous onslaught on the cryptocurrency industry.
3/ BTW, it's hard to believe the SEC would Wells without conducting sufficient investigation to support the claims; way too risky outside the TRO scenario. That said, I've heard plenty of anecdotes about the crypto unit dropping a Wells out of the blue, which is kinda scuzzy.
— Marc Fagel (@Marc_Fagel) November 2, 2024
Former SEC regional director Marc Fagel weighs in on the sudden Wells Notice issued: "It's hard to believe the SEC would Wells without conducting sufficient investigation to support the claims; way too risky outside the TRO (Temporary restraining order) scenario."
Fagel went on to say, "That said, I've heard plenty of anecdotes about the crypto unit dropping a Wells out of the blue, which is kinda scuzzy."
In its blog post, Immutable says it was aware of related inquiries from the U.S. Department of Justice (DOJ) but no actual or proposed legal action.