Today, October 8, Crypto.com announced that it has filed a lawsuit against the United States Securities and Exchange Commission to challenge what it describes as the agency’s overreach in regulating the crypto industry. The company aims to protect the future of crypto in the United States by challenging the authority of the SEC and its enforcement methods. He demanded a jury trial.
The lawsuit follows a Wells notice that Crypto.com received from SEC staff, indicating potential enforcement actions. The company argues that the SEC engages in unauthorized regulation through enforcement actions, acting beyond its legal mandate. The move aligns Crypto.com with other industry peers who are actively defending themselves against what they see as bad intentions on the part of the federal agency.
Crypto.com’s lawsuit claims that the SEC unilaterally extended its jurisdiction beyond legal limits. Specifically, the company disputes the SEC’s position that almost all crypto asset transactions are securities transactions, except those involving Bitcoin (BTC) and Ether (ETH). Crypto.com claims that this position is inconsistent and lacks legal basis, especially when other digital assets share virtually identical characteristics and are sold in the same manner as BTC and ETH.
The company also points out that the SEC failed to comply with the mandatory notice and comment period required by the Administrative Procedure Act in establishing this rule. By circumventing this process, Crypto.com claims that the SEC’s actions are arbitrary and capricious.
In addition to the lawsuit, Crypto.com’s subsidiary, Crypto.com | Derivatives North America (CDNA) has filed a petition with the Commodity Futures Trading Commission (CFTC) and the SEC. The petition seeks a common interpretation to confirm that certain crypto derivatives products are regulated only by the CFTC. Under the Dodd-Frank Act, agencies have 120 days to issue a jointly approved interpretation or to reject it with a written explanation.
Crypto.com highlights its commitment to compliance and regulatory oversight. In the United States, the company is registered as a money services business with the Financial Crimes Enforcement Network (FinCEN) and holds “more than 40 state licenses for money transmitters.” CDNA is registered as a designated contract and derivatives market clearing organization with the CFTC. These registrations reflect the Company’s adherence to various regulatory regimes applicable to its operations.
Crypto.com said:
“We believe that security and compliance are the foundations of the widespread adoption of cryptocurrencies (…)
We seek to stop the SEC’s illegal actions that exceed its authority and violate federal law.”
The company believes that recent court rulings against SEC claims against other crypto industry players strengthen its position. She hopes the US justice system will verify the SEC’s actions and validate its claims.
By challenging the SEC’s approach, Crypto.com hopes to set a precedent that clarifies regulatory boundaries and fosters a more constructive environment for crypto businesses.
For now, Crypto.com assures its customers and stakeholders that “it’s business as usual” as the company continues to pursue “crypto in every wallet.”
