Former SEC official: SEC's Wells notice to Immutable without thorough investigation poses risks

Former U.S. SEC official Marc Fagel expressed concern about the agency's recent Wells Notice to Ethereum Web3 game company Immutable. Immutable said it was issued without prior communication or limited explanation, which is inconsistent with the usual more extensive investigation procedures. Fagel commented that it is uncommon for the SEC to issue such notices without a thorough investigation first, suggesting that this practice may be "risky." In typical cases, companies expect to interview or communicate for several months before receiving a Wells notice, and deviations from this standard practice may be considered "risky." Earlier news, Ethereum game company Immutable received a Wells Notice from the U.S. SEC, accused of suspected violations of securities laws, and may soon face enforcement actions. Immutable said in a statement that the regulator also sent a letter to the company's CEO James Ferguson and the Digital Worlds Foundation, which helped issue Immutable's IMX token, detailing suspected violations of securities laws. Although the company claims that the SEC did not fully account for the alleged wrongdoing, Immutable believes that the charges stem from the 2021 IMX sale. In addition, the SEC also accused Immutable of making false statements to the public about its token support. This included a "pre-IPO investment" in IMX.