Immutable announced that the Securities and Exchange Commission has notified the company it is formally closing its inquiry into the company and related parties.
There have been no findings of wrongdoing and the SEC is not taking any action. This closes the loop on the Wells notice (of an ongoing investigation with an intention to sue) issued by the SEC last year.
The notification is in line with actions taken by the Trump administration to dismantle regulations set up by the Biden administration to protect the public from cryptocurrency scams and prevent another ponzi scheme on the order of the FTX debacle. The Wells notice non-specifically alleged violations of securities law and alleged misrepresentations by the company.
When the Wells notice was sent last year, Immutable protested and argued it was innocent of any wrongdoing. It said the SEC inquiry was the “latest in their de facto policy of regulation-via-enforcement” that has targeted leading companies across almost every category in Web3. Immutable had joined Coinbase, Consensys, Ripple, OpenSea, Crypto.com and others who all faced SEC escalations, many in the last two months before the U.S. election.
At the time, Immutable said that the SEC was continuing to indiscriminately assert that tokens are securities. While not specified in the notice, Immutable believed its claims were targeting the listing and private sales of the company’s IMX token in 2021. A Wells notice is an indication from the SEC that it is considering bringing a lawsuit against a company.
“We are pleased the SEC has concluded its inquiry. This marks a significant milestone for the cryptoindustry and gaming as we advance towards a future with regulatory clarity,” said Robbie Ferguson,president of Immutable, in a statement. “Immutable continues to build towards our vision of bringing digital ownership to the 3.1 billion gamers across the world; we can now build unencumbered towardthat.”
Regulatory clarity is set to be a major unlock for investment into web3 gaming, an industry that has already attracted more than $12 billion of venture capital funding since 2020. Major triple-A gamingstudios have previously cited legal and compliance risks as key barriers to entry into the market.
However, with a clear regulatory framework on the horizon, this is expected to unlock further investment and opportunities to tokenize the now more than $100 billion market for in-game purchases. For gamers, Immutable said this means true digital ownership of in-game items, with the freedom to trade, sell, or transfer them across platforms and ecosystems.
In a message to GamesBeat, Ferguson said, “This is a great moment for Web3 gaming. With the operational overhead of a Wells notice lifted, Immutable can continue building to make Web3 gaming accessible to the masses with the best gaming wallet and chain in the market.”
Immutable’s backstory
Immutable has led the way in Web3 games, onboarding more than 500 blockchain games onto its platform. Ferguson started the company back in 2018, well before the craze around Web3 games had started.
During the non-fungible token (NFT) boom, the company came onto my radar in March 2021, at the onset of the Web3 gaming boom, when Immutable was doing deals. Ferguson explained to me how Web3 game transactions could be done in a secure, speedy and low-cost way.
It has also raised $300 million from global investors including Temasek, Tencent, Bitkraft, King River Capital, and Galaxy Digital. Its aim is make it safe and easy for players to play Web3 games. The company said its gaming platform, which includes the Immutable zkEVM solution using zero-knowledge proofs, makes it easy for game studios and independent developers to safely and confidently build and launch successful games on Ethereum without sacrificing player experience. That high profile ultimately turned Immutable into a target for regulators.
Asked what this means for Immutable, Ferguson said in a statement, “This now allows Immutable to fully capitalize on the enormous opportunity in front of it. Regularity clarity is set to be a major unlock for investment into Web3 gaming, an industry that has already attracted more than $12 billion of venture capital funding since 2020.”
He added, “Major triple-A gaming studios have previously cited legal and compliance risks as key barriers to entry into the market. Even with that backdrop, Immutable has onboarded three $1 billion-plus gaming companies. Now with a clear regulatory framework on the horizon, this is expected to catalyse further investment and opportunities from large triple-A gaming studios to tokenize the now more than $200 billion market for in-game purchases.”
And he said, “Immutable is also primed to take advantage of increasing institutional capital flows into digital assets markets. As the highest value gaming token in the market, further institutional opportunities, including IMX being included into an ETF, are now more likely.”
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