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Key Takeaways
- Cryptocurrency exchange Crypto.com has sued the SEC, indicating it believes the agency has overstepped its legal boundaries in regulating the crypto industry.
- The lawsuit was filed Tuesday after the SEC earlier sent Crypto.com a Wells Notice, which informs the recipient that the SEC is considering formal legal action against it.
- Crypto.com’s lawsuit says the SEC has been inconsistent in its application of securities law to crypto, stating that other crypto assets deserve the leeway given to bitcoin and Ethereum’s token.
- Blockchain technology company Consensys also preemptively sued the SEC after receiving a Wells Notice earlier in the year.
Cryptocurrency exchange Crypto.com on Tuesday sued the U.S. Securities and Exchange Commission (SEC) over concern that the SEC’s actions overstep legal boundaries and undermine the future of the crypto industry in the U.S.
According to Crypto.com, the lawsuit follows a Wells Notice issued in August by the SEC to the company, which is a letter that indicates the SEC’s intention to bring an enforcement case against the crypto startup.
The crux of Crypto.com’s lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond the limits established by law, particularly by classifying most crypto transactions as securities dealings.
Crypto.com Suit Accuses SEC of Inconsistency
The company contends that this regulatory position is applied inconsistently, exempting bitcoin (BTCUSD) and ether (ETHUSD) despite their perceived similarity to other crypto assets. Crypto.com also emphasized in the suit that the SEC bypassed key procedural steps, including the notice and comment rulemaking requirements under the Administrative Procedure Act.
By filing this suit, Crypto.com said it aims to halt what it views as the SEC’s “unlawful” campaign against the crypto industry.
Additionally, Crypto.com has filed a petition with the Commodity Futures Trading Commission (CFTC) and the SEC to establish a clearer regulatory framework for cryptocurrency derivatives in the U.S.
Blockchain technology firm Consensys also filed a preemptive lawsuit against the SEC earlier this year after receiving a Wells Notice.