- SEC ends CyberKongz case with no charges showing a shift in crypto regulation strategy.
- CyberKongz probe focused on a 2021 contract move not a token sale as the SEC had suggested.
- More crypto cases are being closed as the SEC moves toward a softer approach in enforcement.
The US Securities and Exchange Commission has ended its investigation into CyberKongz. No enforcement action will be taken against the project. The team behind CyberKongz confirmed the closure on Tuesday. The probe lasted more than two years.
CyberKongz is a well-known NFT and gaming project on Ethereum. It gained popularity for its pixelated primate avatars and metaverse-style games. The case became a major concern for the Web3 community as it symbolized the lack of clarity in crypto regulations.
The SEC questioned an event from April 2021 that involved the release of Genesis Kongz. The agency believed it could be an illegal securities sale. The project team said it was only a contract migration and they argued it was a technical update and not a token sale. This became a central issue in the investigation.
In December, CyberKongz received a Wells notice from the SEC. This notice warned that the regulator might take legal action. The team believed the notice showed a poor understanding of smart contracts. They said the agency could not tell the difference between a primary sale and a technical function.
SEC Shifts Stance on Crypto Firms
The closure of the CyberKongz case reflects a wider change at the SEC. The agency has recently eased pressure on several crypto firms. It has dropped or paused investigations into Robinhood, Coinbase, Kraken, Immutable, and Consensys.
However, some major cases are still active. Investigations into Binance and OpenSea remain open. Despite this, the general trend shows a softer approach than in past years.
Leadership Change Sparks New Direction
The SEC’s policy shift follows political changes in Washington. A new administration took office in January. Soon after, SEC Chair Gary Gensler resigned. His departure marked a turning point for crypto regulation.
The agency created a new Crypto Task Force. This team is working on clearer rules for digital assets. It also aims to build better relationships with blockchain developers. The CyberKongz case outcome may be one of the task force’s first effects.
CyberKongz to Relaunch After Legal Win
CyberKongz first launched in 2021 during the NFT boom. It later expanded into gaming and virtual worlds. The project built a strong online community.
The long legal battle caused delays and high legal costs. The team called it the biggest challenge they had faced. Now, the project plans a full rebrand and a new direction. They hope the case result will support other Web3 builders.
