The company asserts that the securities watchdog has no jurisdiction over cryptocurrencies
Crypto.com has filed a lawsuit against the US Securities and Exchange Commission (SEC), challenging the agency’s authority over the cryptocurrency market. The legal action follows the platform’s receipt of a Wells notice from the SEC, indicating that the regulator believes tokens traded on Crypto.com’s platform should be classified as securities. A Wells notice typically signals that the SEC plans to take enforcement action.
Crypto.com argues that the SEC has overstepped its regulatory boundaries, accusing the agency of unilaterally expanding its jurisdiction. The lawsuit claims that the SEC has wrongly classified the majority of crypto transactions as securities dealings, which the company believes goes beyond the SEC’s statutory authority.
This isn’t the first time the SEC has faced pushback from crypto firms. Several companies, including Coinbase, Robinhood’s crypto division, and NFT marketplace OpenSea, have received similar Wells notices, all of which criticize the SEC’s approach to regulating the rapidly evolving digital assets industry. Crypto companies argue that the SEC’s aggressive stance threatens innovation and overregulates a space that they claim falls outside the agency’s core jurisdiction.
Crypto.com filed the lawsuit in a federal court in Tyler, Texas, naming SEC Chair Gary Gensler and four other commissioners as defendants. Additionally, the company has petitioned both the SEC and the Commodity Futures Trading Commission (CFTC) for a joint interpretation to clarify which body has regulatory oversight of cryptocurrency derivatives.
With multiple firms taking legal action and the SEC continuing its enforcement efforts, this case could play a key role in determining how the US government regulates the cryptocurrency industry moving forward. Both the SEC and CFTC have yet to respond publicly to these legal developments.
