Today, Crypto.com made headlines as it announced its decision to take legal action against the US Securities and Exchange Commission (SEC). The company has filed a lawsuit challenging what it perceives as the SEC’s overreach in regulating the crypto industry. By contesting the agency’s authority and enforcement methods, Crypto.com aims to safeguard the future of cryptocurrency in the United States. The company has made it clear that it is seeking a jury trial to address the issues at hand.
The lawsuit comes in response to a Wells notice that Crypto.com received from the SEC staff, indicating potential enforcement action. Crypto.com argues that the SEC is overstepping its bounds by engaging in what the company deems as unauthorized regulation through enforcement actions. This move aligns Crypto.com with other industry players who are also pushing back against what they view as the SEC’s questionable tactics.
At the core of Crypto.com’s lawsuit is the contention that the SEC has expanded its jurisdiction beyond legal limits. The company specifically challenges the SEC’s stance that the majority of crypto asset trades constitute securities transactions, with the exception of Bitcoin (BTC) and Ether (ETH). Crypto.com argues that this position lacks a legal basis and is inconsistent, especially considering that other digital assets share similar characteristics and are sold in a similar manner to BTC and ETH.
Furthermore, Crypto.com highlights that the SEC failed to adhere to the mandatory notice and comment period required by the Administrative Procedure Act when establishing this rule. By sidestepping this process, Crypto.com asserts that the SEC’s actions are arbitrary and unjust.
In addition to the lawsuit, Crypto.com’s affiliate, Crypto.com | Derivatives North America (CDNA), has filed a petition with both the Commodity Futures Trading Commission (CFTC) and the SEC. The petition seeks a joint interpretation to confirm that certain crypto derivative products fall under the sole regulation of the CFTC. Both agencies have 120 days to issue a jointly approved interpretation or provide a written explanation for denial, as per the Dodd-Frank Act.
Emphasizing its commitment to compliance and regulatory oversight, Crypto.com highlights its registrations with various regulatory bodies. The company is registered as a money services business with FinCEN in the US and holds over 40 state money transmitter licenses. CDNA is registered as a designated contract market and derivatives clearing organization with the CFTC. These registrations demonstrate Crypto.com’s adherence to the regulatory frameworks governing its operations.
In a statement, Crypto.com expressed its belief that security and compliance are essential for mainstream cryptocurrency adoption. The company is determined to halt what it perceives as the SEC’s illegal actions that exceed its authority and violate federal law.
Crypto.com remains optimistic about the outcome of the lawsuit, citing recent court rulings that have favored other crypto industry participants against the SEC. The company trusts that the US judicial system will provide a fair assessment of the situation and validate its claims.
By challenging the SEC’s regulatory approach, Crypto.com hopes to establish a precedent that clarifies boundaries and creates a more conducive environment for crypto businesses to thrive. Despite the legal proceedings, Crypto.com reassures its customers and stakeholders that its operations continue as usual, with a continued focus on making cryptocurrency accessible to all.
In conclusion, Crypto.com’s decision to take on the SEC reflects the growing pushback against what some in the industry view as excessive regulatory measures. The outcome of this legal battle could have far-reaching implications for the future of cryptocurrency regulation in the United States.