Calling it a “misguided” federal agency, Crypto.com sued the Securities and Exchange Commission (SEC).
The suit, filed Tuesday (October 8), came after the cryptocurrency company received a Wells Notice from the Commission (SEC), generally considered a sign of ongoing enforcement action.
“While this is an unprecedented move for our company to take legal action against a federal agency, this agency’s actions toward our industry leave us with no other choice,” the company said in a press release.
“Specifically, our lawsuit contends that the SEC has unilaterally extended its jurisdiction beyond legal limits and separately that the SEC has established an illegal rule that transactions in almost all crypto assets are securities transactions, regardless of the way they are sold, while identical transactions in bitcoin (BTC) and ether (ETH) are not sold one way or another.
PYMNTS reached out to the SEC for comment but did not receive a response.
According to the lawsuit, Crypto.com received Wells’ notice in August, with SEC staff saying it would recommend the regulator take enforcement action against the company, based on the argument that certain tokens Network assets sold on the platform are crypto asset securities.
“The SEC has refused to provide Crypto.com with a complete list of network tokens sold on the platform that it plans to claim are crypto asset securities,” the suit states. “Instead, it referred Crypto.com to further enforcement actions in which the SEC asserted claims based on secondary market sales of various network tokens.”
In its press release, Crypto.com said Wells’ opinion illustrates the SEC’s “unauthorized and unfair regulation by the enforcement campaign,” arguing that this despite signs that the next administration – whatever whichever side prevails in the November presidential election – will be friendlier to the crypto industry.
The term “regulation by enforcement” is popular among US crypto companies as they continue to wage a legal battle with the SEC. It was used last month when Coinbase asked an appeals court to force the regulator to create new rules for digital assets.
“Regulation by enforcement only harms American consumers, innovation, American competitiveness, and our national security,” Coinbase legal chief Paul Grewal wrote in a thread on X. “Coinbase is determined to leave no stone unturned in our efforts to bring clarity.” our industry and the millions of Americans who hold cryptocurrencies.
When the SEC announced last year that it was denying Coinbase’s request for new rules in the digital assets industry, SEC Chairman Gary Gensler said he supported the decision for three reasons.
“First, existing laws and regulations apply to crypto securities markets,” Gensler said. “Second, the SEC also addresses crypto securities markets through rulemaking. Third, it is important to retain the Commission’s discretion in setting its own regulatory priorities.
