Immutable, the company behind the Ethereum-based gaming platform, has received a Wells notice from the US Securities and Exchange Commission (SEC). This notification warns the company of potential enforcement action regarding the sale of its IMX token.
Immutable X Team Argues Their Tokens Are Not Securities
The SEC also sent a letter to Immutable CEO James Ferguson and the Digital Worlds Foundation, which assisted in the IMX token issuance, outlining alleged violations of securities laws.
While the specifics of the alleged misconduct were not fully detailed, Immutable believes the SEC’s concerns stem from IMX token sales in 2021, particularly a sale on the CoinList platform that raised at least $12.5 million. Immutable maintains that the IMX token is not a security. A company spokesperson stated that the Wells notice “simply cited statutory provisions and contained limited meaningful detail.”
The SEC has also accused Immutable of misrepresenting the token’s backing, specifically questioning a pre-launch investment from Huobi Ventures detailed in a 2021 blog post.
This marks the first known instance of the SEC targeting a crypto gaming firm. Immutable views this action as an expansion of the SEC’s regulatory reach into the gaming industry.
The SEC declined to comment on the matter, stating its policy of not confirming or denying the existence of investigations.
IMX, an ERC-20 token on Ethereum, is described by Immutable as a utility token used for transactions on its layer-2 scaling networks (Immutable X and Immutable zkEVM), staking, and platform governance. It currently holds the highest market capitalization among gaming tokens, valued at $2.1 billion.
An Immutable spokesperson criticized the timing of the Wells notice, suggesting it was delivered shortly before the US presidential election, which could lead to changes in SEC leadership.
