Crypto.com initiates lawsuit against SEC, aiming to protect crypto future in US
Crypto.com contests SEC's broad application of securities laws.
Key Takeaways
- Crypto.com has filed a lawsuit against the SEC over its crypto regulations.
- The company challenges the SEC's rule that treats most crypto transactions as securities.
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Crypto.com confirmed Tuesday it received a Wells notice from the SEC. In response, the company initiated a lawsuit against the securities regulator, aiming to defend the crypto industry’s future in the US.
A Wells notice serves as a formal warning that the SEC is threatening legal action against the recipient, here Crypto.com. The notice indicates that the SEC believes the company may have violated securities laws.
Crypto.com is not the only major firm targeted by the SEC for potential violations of unregistered securities offerings. Robinhood, Uniswap, Consensys, and OpenSea confirmed receiving Wells notices earlier this year.
Crypto.com claims that the SEC has overstepped its authority by claiming most crypto transactions are securities while excluding similar transactions with Bitcoin and Ethereum. According to the company, the SEC’s rule is “unauthorized and unjust regulation.”
Crypto.com also argues that the rule was implemented without the mandatory notice and comment period as required by the Administrative Procedure Act, labeling the enforcement as arbitrary and capricious.
The lawsuit is part of the company’s broader effort to stop the SEC from enforcing what it views as an illegal overreach by the Commission. In addition to challenging the SEC’s unfair regulations, Crypto.com petitions the SEC and CFTC to clarify how crypto derivatives are regulated.
This is a developing story.
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