Exchange challenges SEC's classification of crypto as securities, seeking clarity and fair regulation.
Crypto.com, a major cryptocurrency exchange, has taken legal action against the U.S. Securities and Exchange Commission (SEC). This move follows a Wells Notice from the SEC, which is a warning of potential legal action. The exchange is challenging what it sees as the SEC's overreach in regulating the crypto industry.
A Wells Notice is a formal notification from the SEC indicating that the agency is considering bringing an enforcement action against a company. In this case, the SEC alleges that Crypto.com has been involved in selling unregistered securities. Crypto.com disputes this claim, arguing that the SEC is improperly categorizing most crypto transactions as securities trades.
Crypto.com argues that the SEC has unlawfully expanded its jurisdiction over the crypto industry. The exchange claims that the SEC's actions are arbitrary and lack a solid legal foundation. By labeling most crypto assets as securities, the SEC is accused of bypassing necessary regulatory procedures.
The lawsuit aims to halt the SEC's actions, which Crypto.com believes threaten the future of the crypto industry in the U.S. The company is also seeking clarity from the U.S. Commodity Futures Trading Commission (CFTC) regarding the regulation of crypto derivative products. This dual approach highlights the need for clear and consistent regulatory guidelines.
This legal battle is part of a larger trend of increased regulatory scrutiny on the crypto industry. Other companies, such as Kraken and Coinbase, have also faced challenges from the SEC. Crypto.com’s CEO, Kris Marszalek, has criticized the SEC's enforcement approach, emphasizing the importance of stopping what he views as an overreach.
