SEC Closes Investigation Into NFT Gaming Project CyberKongz

Gaming NFT

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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April 16, 2025 01:24 EDT

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The US Securities and Exchange Commission has formally closed its investigation into CyberKongz, a prominent Ethereum-based NFT and gaming project, with no enforcement action taken, the team announced on Tuesday.

CyberKongz described the decision as a landmark moment, ending what it called years of “unjust allegations, crippling legal fees, and the biggest hurdle we could possibly encounter.” The project, known for its pixelated primate avatars and immersive metaverse-style gaming experiences, had become a symbol of regulatory uncertainty in the Web3 space.

In December, CyberKongz received a Wells notice from the SEC, which the project said reflected a confusing stance on how smart contracts function.

One of the main issues raised by the regulator was the alleged sale of Genesis Kongz in April 2021. However, the team clarified this was not a token sale but a contract migration. They argued that if the SEC cannot tell the difference between a primary sale and a technical update, it raises serious concerns about the clarity of current crypto regulations.

SEC’s Enforcement Eases Following Trump’s Return

The announcement comes as the SEC begins to ease its posture toward crypto companies.

In line with this shift, the agency has recently paused or dropped several high-profile investigations. These include cases involving Coinbase, Kraken, Robinhood, Immutable and Consensys. At the same time, some probes, like those into Binance and OpenSea, remain open. However, the overall trend points to a softer enforcement approach than in previous years.

This shift in approach coincides with a political transition in Washington. The second Trump administration took office in January, followed by the resignation of SEC Chair Gary Gensler.

Days later, the agency launched a new Crypto Task Force to develop clearer rules for the industry, marking a turn toward regulatory clarity and collaboration.

CyberKongz Says Victory Signals Hope for Builders Across Web3

CyberKongz was founded by a group of artists and developers. It first gained traction in 2021 during the NFT boom. The project featured uniquely generated gorilla avatars that attracted a cult following. It later expanded into a larger gaming and metaverse ecosystem. The team described its legal battle as a stand for the entire Web3 space, not just itself.

“We are a small, passionate, and creative Web3 team that elected to fight this battle for the betterment of Web3,” the project said. A full rebrand and new direction will be announced soon, it added.

The case is now closed. CyberKongz said it hopes the outcome will inspire other blockchain projects to keep building with confidence. “It should be celebrated by all that our space is here to stay,” the team said.