Nikolas Sargeant
The US Securities and Exchange Commission has officially concluded its investigation into CyberKongz, a leading Ethereum-based NFT and gaming project, without taking enforcement action, the team announced Tuesday.
CyberKongz called the decision a watershed moment, ending what they described as years of "unjust allegations, crippling legal fees, and the biggest hurdle we could possibly encounter." The project, recognized for its pixelated primate avatars and immersive metaverse gaming experiences, had become emblematic of regulatory uncertainty within Web3.
In December, CyberKongz received a Wells notice from the SEC, which the project claimed demonstrated a fundamental misunderstanding of smart contract functionality.
A key issue raised by regulators concerned the alleged sale of Genesis Kongz in April 2021. The team countered that this was actually a contract migration rather than a token sale. They argued that the SEC's inability to distinguish between a primary sale and a technical update raises profound questions about current crypto regulatory frameworks.
Crypto Enforcement Shifts Under New Administration
The announcement aligns with the SEC's softening stance toward crypto enterprises.
Reflecting this change, the agency has recently suspended or abandoned several high-profile investigations, including cases involving Coinbase, Kraken, Robinhood, Immutable, and Consensys. While some investigations, such as those into Binance and OpenSea, continue, the general trend suggests a more lenient enforcement approach compared to previous years.
This enforcement shift coincides with Washington's political transition. The second Trump administration took office in January, followed by SEC Chair Gary Gensler's resignation.
Shortly thereafter, the agency established a new Crypto Task Force to develop clearer industry guidelines, signaling a move toward regulatory clarity and cooperation.
Victory Represents Turning Point for Web3 Projects
CyberKongz was established by a collective of artists and developers, gaining popularity during the 2021 NFT boom with its uniquely generated gorilla avatars that cultivated a dedicated following. The project later expanded into a broader gaming and metaverse ecosystem. The team portrayed its legal struggle as representing the entire Web3 community.
"We are a small, passionate, and creative Web3 team that elected to fight this battle for the betterment of Web3," the project stated. They plan to announce a complete rebrand and new direction soon.
With the case now resolved, CyberKongz expressed hope that the outcome will encourage other blockchain projects to continue development with renewed confidence. "It should be celebrated by all that our space is here to stay," the team concluded.
