Crypto.com files lawsuit against SEC after receiving Wells notice

Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), joining a growing list of cryptocurrency companies pushing back against the regulatory body's approach to crypto assets. 

The legal action comes in response to what the company describes as overreach by the SEC in its regulation of the cryptocurrency industry.

For now, Crypto.com assures its customers that operations will continue as usual as it challenges the SEC's stance in court.

The move follows Crypto.com’s receipt of a Wells notice from the SEC, which is a heads-up that they might face enforcement action. However, receiving this notice doesn't automatically mean the company has engaged in wrongdoing.

Crypto.com argues that the SEC's tactics exceed its legal boundaries, despite signals from political leaders that the next administration may adopt a more favorable stance toward the crypto sector.

Similar Wells notices have also been issued to NFT marketplace OpenSea, crypto exchanges Coinbase (NASDAQ:COIN ) and Kraken, as well as the popular trading app Robinhood (NASDAQ:HOOD ).

In its lawsuit, Crypto.com claims the SEC unlawfully expanded its jurisdiction by labeling most crypto assets as securities, excluding major assets like Bitcoin and Ether . The company argues that this classification was done without the proper legal process and lacks a consistent rationale, as transactions in many crypto assets resemble those of BTC and ETH.

Separately, Crypto.com submitted a petition with the Commodity Futures Trading Commission (CFTC) and SEC to clarify which agency has regulatory authority over certain cryptocurrency derivatives. The Singapore-based firm argues that these products fall solely under the CFTC's jurisdiction, seeking a more definitive regulatory framework for the industry.

That said, the exchange elaborated on its registration with the Financial Crimes Enforcement Network (FinCEN) and over 40 state money transmitter licenses in the U.S. It also pointed to its designation as a contract market and clearing organization with the CFTC.

“We are proud to be the industry’s global leader for licenses, registrations and security certifications – maintaining more than 100 regulatory approvals to operate in jurisdictions around the world and supporting the design of regulatory frameworks built for purpose and today’s digital economy, along with best-in-class safety and security certifications,” the exchange added.

Crypto.com saw its spot and derivatives trading volume jump by over 40% month-to-month in September, according to CCData. So far this year, the exchange made the biggest gain in spot trading, boosting its market share to 10.5%.

Source: Investing.com