The United States Securities and Exchange Commission (SEC) issued a Wells notice to Immutable within the last month, a company spokesperson told Decrypt on Thursday, warning the Ethereum gaming platform’s maker that it could soon face an enforcement action.

The company said in a statement that the regulator also sent a letter detailing alleged violations of securities laws to the company’s CEO James Ferguson, alongside the Digital Worlds Foundation, which helped issue Immutable’s IMX token.

While the company claims that the SEC did not specify the alleged misconduct in full, Immutable believes the allegations are rooted in IMX sales from 2021. Back then, Immutable said on Twitter (aka X) that it had quickly raised at least $12.5 million after the token was put on CoinList, a platform enabling investors to access tokens before they’re listed on an exchange.

“Despite the SEC indiscriminately claiming that tokens across the industry are securities, we are confident the IMX token is not,” the Immutable spokesperson said. “The notice simply cited statutory provisions and contained limited meaningful detail.”

Additionally, the SEC has accused Immutable of making misrepresentations to the public about its token’s backing. That included a “pre-launch investment” into IMX that the regulator purportedly believes did not happen. The investment from Huobi Ventures was detailed in a 2021 blog post.

It's the first known instance of the regulator issuing a threat against a crypto gaming firm. While the SEC has sued numerous crypto firms over the past few years, the company spokesperson affirmed that “with this latest move against Immutable, the SEC’s overreach has expanded into gaming.”

In response to a request for comment, an SEC spokesperson said that “the SEC does not comment on the existence or nonexistence of a possible investigation.”

On its website, Immutable describes IMX as a token that can be used for certain transactions on the company’s Ethereum layer-2 scaling networks: Immutable X and Immutable zkEVM. Additionally, the token is used in staking and Immutable platform governance, letting holders weigh in on proposals like grants for game developers.

Issued as an ERC-20 token on Ethereum, IMX is listed on CoinGecko as the top gaming coin by market capitalization, valued at $2.1 billion. Hosting games developed in-house like Gods Unchained and Guild of Guardians on its networks, the company has also worked with firms outside the crypto sphere on making tokenized digital assets part of mainstream gaming.

Before abandoning NFTs in January, video game retailer GameStop supported in-game assets that exist on Immutable X through its now-shuttered marketplace. Immutable is also working with Ubisoft’s Strategic Innovation Lab on developing an upcoming blockchain game.

The Immutable spokesperson accused the SEC of tossing over a bare-bones Wells Notice just before the upcoming U.S. presidential election, which could bring about leadership change at the agency’s highest levels. During Immutable’s “very first interaction” with the SEC, the agency informed the firm that it would receive a Wells notice within a week, they added.

Following the SEC’s enforcement blitz last year, the regulator has threatened lawsuits beyond those for major exchanges like Coinbase and Binance, which were sued in the aftermath of FTX’s collapse. This year, the trading platform Robinhood, the NFT marketplace OpenSea, and the decentralized exchange Uniswap have all said that they received Wells Notices from the regulator.

The IMX token was launched in November 2021. Immutable said that it has raised approximately $300 million to date in equity fundraising rounds, with backers including Coinbase Ventures and Animoca Brands.

The company’s latest funding round was held in 2023, and the Immutable spokesperson signaled that the company is prepared to defend itself. Pointing to over “nine figures in cash and cash equivalents,” they said “Immutable is well capitalized with a large war-chest.”

Edited by Andrew Hayward

Editor's note: This story was updated after publication to correct that the Digital Worlds Foundation is independent of Immutable, and to clarify funding details.