Crypto.com sues the US SEC after Wells notice

• com has sued the SEC for overreaching its regulatory authority over crypto.
• The lawsuit challenges SEC rules categorizing most crypto transactions as securities.
• com seeks clarity on crypto derivatives through a petition with the CFTC.

Crypto.com has today filed a lawsuit against the US Securities and Exchange Commission (SEC) in response to a Wells notice received from the agency.

According to a communication from the exchange, the lawsuit aims to challenge what Crypto.com describes as the SEC’s overreach and misguided regulatory actions that threaten the future of the crypto sector in the United States.

The complaint asserts that the SEC has improperly expanded its jurisdiction, claiming that virtually all cryptocurrency transactions qualify as securities, except for those involving Bitcoin (BTC) and Ethereum (ETH).

This claim is based on the assertion that the SEC has established an unlawful rule without the necessary notice and comment period mandated by the Administrative Procedure Act.

According to Crypto.com, this arbitrary enforcement contradicts the fundamental principles of fair regulatory practices, particularly given that the characteristics and sales methods of various crypto assets are often indistinguishable from those of BTC and ETH.

Crypto.com emphasizes that it has always prioritized compliance and security, operating as a registered money services business with the Financial Crimes Enforcement Network (FinCEN) and holding over 40 state money transmitter licenses. The company views this lawsuit as a necessary step to halt the SEC’s actions, which they argue exceed its legal authority and violate federal law.

In addition to the lawsuit, Crypto.com’s subsidiary, Crypto.com | Derivatives North America, has filed a petition with the Commodity Futures Trading Commission (CFTC) and SEC. This petition seeks a joint interpretation confirming that certain cryptocurrency derivative products fall solely under the CFTC’s jurisdiction, further demonstrating Crypto.com’s commitment to clarifying regulatory frameworks for the industry.

As Crypto.com navigates this unprecedented legal challenge, the company remains steadfast in its operations, asserting that its commitment to regulatory compliance will ultimately benefit its customers and the broader crypto ecosystem.

This lawsuit not only underscores the growing tension between cryptocurrency businesses and regulatory agencies but also highlights the urgent need for clearer regulations in the rapidly evolving digital economy.