Today, October 8, Crypto.com reported that it has filed a lawsuit against the U.S. Securities and Exchange Commission to challenge what it calls the agency’s overreach in regulating the cryptocurrency industry. The company aims to challenge the SEC’s authority and its enforcement methods and protect the future of cryptocurrencies in the United States. demanded a jury trial.
This legal action follows a Wells notice of potential enforcement action that Crypto.com received from SEC staff. The company claims the SEC is going beyond its legal obligations and engaging in unauthorized enforcement regulation. This move brings Crypto.com into line with other industry companies that proactively protect themselves from what they deem to be malicious acts by the federal government.
The Crypto.com lawsuit alleges that the SEC unilaterally expanded its jurisdiction beyond the statutory scope. Specifically, the company disputes the SEC’s view that almost all crypto asset transactions are securities transactions, with the exception of transactions involving Bitcoin (BTC) and Ether (ETH). Crypto.com argues that this stance is inconsistent and lacks legal basis, especially when other digital assets share virtually identical characteristics and are sold in the same way as BTC and ETH. I am doing it.
The company also notes that the SEC did not follow the notice and comment period required by the Administrative Procedure Act in enacting this rule. By circumventing this process, Crypto.com argues that the SEC’s actions are arbitrary and capricious.
In addition to the lawsuit, Crypto.com’s affiliate, Crypto.com|Derivatives North America (CDNA), has filed petitions with both the Commodity Futures Trading Commission (CFTC) and the SEC. The petition seeks a joint interpretation to confirm that certain virtual currency derivative products are regulated only by the CFTC. Under the Dodd-Frank Act, each agency has 120 days to issue a jointly approved interpretation or refute the interpretation with a written explanation.
Crypto.com emphasizes its commitment to compliance and regulatory oversight. In the United States, the company is registered as a money services operator with the Financial Crimes Enforcement Network (FinCEN) and holds “money transfer licenses in over 40 states.” CDNA is registered with the CFTC as a designated contract market and derivatives clearing organization. These registrations reflect compliance with the various regulatory regimes applicable to our business operations.
Crypto.com says:
“We believe that security and compliance are fundamental to achieving mainstream adoption of cryptocurrencies (…)
We seek to prevent illegal activity that exceeds the SEC’s authority and violates federal law. ”
The company believes recent court rulings on SEC claims against other crypto industry participants will strengthen its position. We believe that the U.S. judicial system will check the SEC’s actions and justify its claims.
By challenging the SEC’s approach, Crypto.com hopes to set a precedent that will clarify regulatory boundaries and foster a more positive environment for crypto businesses.
For now, Crypto.com assures customers and stakeholders that it is “business as usual” as the company continues to pursue “cryptocurrency in every wallet.”
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