Crypto.com Sues SEC to Protect the Future of Crypto in the US

Crypto exchange Crypto.com has filed a suit against the United States Securities and Exchange Commission (SEC) to protect the future of the crypto industry in the country.

In a press release on Tuesday, the crypto exchange noted that the suit was filed after it received a Wells notice from an SEC staff on Monday.

“Our decision to sue the SEC follows our receipt of a Wells notice from the Commission staff, illustrating that the SEC’s unauthorized and unjust regulation by enforcement campaign continues despite bipartisan indications that the next Administration will take a more constructive and effective approach to advancing crypto in the US,” the exchange wrote.

SEC usually sends Wells notices to companies and individuals when it plans to bring an enforcement action against them. Such notices are sent after an investigation into possible securities law violations.

Protecting the Future of Crypto in the US

While Crypto.com did not explicitly state why it has received this notice, the company said the latest suit is part of an effort to protect the future of the crypto industry in the US.

The crypto exchange has joined a growing list of actively defending itself against the SEC’s regulatory scrutiny.

Regulatory Scrutiny 

Crypto.com voiced concerns over the often discussed SEC’s harsh regulation-by-enforcement approach towards crypto firms in the US and the agency’s overreach. 

“Specifically, our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold, whereas identical transactions in bitcoin (BTC) and ether (ETH) are somehow not,” the crypto exchange said.

SEC’s crackdown on industry firms has often been linked to the agency’s claims that most crypto assets offered are securities if they pass the Howey test criteria.

Crypto.com stated that while it is unprecedented for it to file a suit against a federal agency like the SEC, the agency’s actions have left it with no other choice.