- Crypto.com has filed a lawsuit against the SEC following a Wells Notice.
- The lawsuit claims that the SEC is overstepping its regulatory authority by classifying most crypto transactions as securities.
After receiving a Wells Notice, Crypto.com is pushing back against the U.S. Securities and Exchange Commission (SEC). According to the report, the crypto exchange filed a lawsuit against SEC, Chair Gary Gensler, and its four commissioners alleging that the federal agency is overstepping its jurisdiction by regulating the crypto industry.
Also, the lawsuit, filed by Crypto.com and its CEO, Kris Marszalek, claims
The SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions.
Further, Crypto.com argues that the SEC’s actions have negatively impacted over 50 million American crypto holders.
What Led to the SEC Sending a Wells Notice to Crypto.com?
On August 22, 2024, the Securities and Exchange Commission issued a Wells notice to Crypto.com, indicating they plan to recommend enforcement action against the exchange. The notice claims the exchange may have operated as an unregistered broker-dealer in its crypto transactions. They also stated that some network tokens sold on the platform qualify as “Crypto Asset Securities” (except for Bitcoin (BTC) and Ethereum (ETH)) under the Securities Act and Exchange Act.
The SEC has been overseeing the crypto sector with various enforcement actions, which companies like Crypto.com, Binance, and Coinbase are challenging.
In addition to the lawsuit, Crypto.com has filed a petition with both the SEC and the Commodity Futures Trading Commission (CFTC), seeking clarification on the regulation of certain cryptocurrency derivatives. The outcome of this legal battle could significantly influence the future of crypto assets in the U.S.
