Crypto.com confirmed on Tuesday that it had received a Wells Notice from the U.S. Securities and Exchange Commission, filing a federal lawsuit against the agency in Texas for “overstepping its authority by insisting on most virtual currency transactions.” He went on the offensive by filing a complaint in the district court. Securities. ”
In filing the complaint, plaintiff Foris DAX Inc., also known as Crypto.com, stated that “despite bipartisan indications, the company has no jurisdiction over secondary market sales of certain tokens sold on its platform.” “We are trying to prevent the SEC from expanding.” The administration will take a more constructive and effective approach to the development of cryptocurrencies in the United States.”
“For now, the SEC’s unwarranted enforcement action is part of the process of operating a legal and licensed cryptocurrency business in the United States,” Crypto.com said in a statement on its website. “It is an unprecedented move for our company to file a lawsuit against a federal agency, but the agency’s actions against our industry leave us with no other choice.”
Tonya M. Evans, a leading expert on digital asset litigation and a professor at Pennsylvania’s Dickinson College of Law, who is not involved in the matter, said in an interview that Crypto.com awaits lawsuits and lawsuits. Instead, he emphasized the bold stance he took in filing the complaint. React defensively.
“The outcome of this case could have far-reaching implications not just for Crypto.com, but for the broader cryptocurrency industry, particularly as it relates to secondary market trading and how it is regulated,” Evans said.
Crypto.com says in its complaint that on August 22, SEC officials sent a notice of wells to Crypto.com, without specifying which tokens sold on the platform were “virtual currencies.” He claimed that the statement stated that he intended to recommend that enforcement measures be taken against him. The term “asset securities” was created by the SEC in September and will no longer be used.
Crypto.com says in its complaint that the “Targeted Network Tokens” at issue in this case are not securities under the Securities Act of 1933 or the Securities Exchange Act of 1934, and that the SEC has He claimed to have acknowledged that fact above. A federal court action involving a competitor of the plaintiff.
“Rather than rely on legal authority or undertake notice-and-comment rulemaking, the SEC entirely invented the term ‘crypto-asset security’ to extend its jurisdiction over the digital-asset industry.” wrote Crypto.com. “This term has no basis in securities or exchange laws, nor does it resemble a financial instrument as defined by those laws.”
Now, the SEC is threatening to take enforcement action against Crypto.com, the company says in its complaint, saying the rules are inconsistent with federal law, exceed the SEC’s statutory authority, and violate the Administrative Procedure Act. He insisted even though he was there.
This leads Crypto.com to sue the SEC, following in the footsteps of law professors Brian Frye and Jonathan Mann, who asked the U.S. District Court in New Orleans to clarify whether NFTs qualify as unregistered securities. It has become the latest industry player. It is under the jurisdiction of Wall Street’s largest regulator.
And instead of heeding calls to participate in formal rulemaking, the SEC “sought to expand its regulatory reach by enforcing the rules through litigation,” said lead counsel and Jones Day’s Dallas office. Mark Rasmussen, a partner at The lawsuit was filed on behalf of Crypto.com and is pending in the United States District Court for the Eastern District of Texas.
Peter Eberle, president and chief investment officer of Castle Funds and former co-head of Pacific Exchange Trading at Goldman Sachs, says the SEC’s continued attacks on cryptocurrency companies will stifle innovation in the United States. He said more companies will focus on growing in the region. If there are clear regulations.
“Congress must act and provide clear guidance to the SEC,” said Eberle, who is not involved in the case. “The SEC’s current enforcement stance calls into question whether comic books, baseball cards, and other collectibles purchased by investors with the expectation of future financial gain constitute securities.”
