Crypto.com has filed a lawsuit against the Securities and Exchange Commission (SEC) in a Texas court, challenging the agency’s authority over cryptocurrency regulation. The move comes after Crypto.com received a Wells notice from the SEC in late August, indicating potential enforcement action against the crypto firm.
Crypto.com’s lawsuit argues that the SEC is exceeding its legal boundaries in two key ways:
- Unilateral Expansion of Jurisdiction: The lawsuit contends that the SEC is overstepping its statutory authority by claiming jurisdiction over crypto assets beyond what the law allows.
- Unlawful Rule on Securities Transactions: The suit further argues that the SEC has established an unlawful rule classifying nearly all crypto asset trades as securities transactions, regardless of the sale method. However, the same logic isn’t applied to similar transactions involving Bitcoin (BTC) and Ethereum (ETH).
This lawsuit aligns with similar actions taken by other crypto companies. Uniswap, Consensys, and Robinhood have also received Wells notices from the SEC, prompting them to take legal action against the regulatory agency. Crypto.com’s lawsuit, similar to Consensys’ earlier filing, names SEC Chair Gary Gensler, commissioners, and the agency itself as defendants.
The Wells notice received by Crypto.com accuses the company of operating as an unregistered broker-dealer and securities clearing agency. While receiving a Wells notice doesn’t guarantee an SEC lawsuit, it signifies the agency’s potential intention to pursue enforcement action.
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Crypto.com claims the SEC has not provided a complete list of network tokens under scrutiny.
The lawsuit states that the SEC has only referred them to enforcement actions against secondary-market sales of specific tokens, leaving Crypto.com in the dark about the exact assets the agency considers securities.
This ongoing dispute between Crypto.com and the SEC highlights the current uncertainty surrounding cryptocurrency regulation in the United States. The SEC’s aggressive approach is prompting resistance from prominent crypto companies, potentially leading to a legal battle that could determine the future of crypto regulation in the US.
Whether Crypto.com’s lawsuit will successfully challenge the SEC’s authority remains to be seen. However, this legal action sheds light on the growing tension between crypto firms and the SEC, emphasizing the need for clearer and more comprehensive regulatory frameworks within the ever-evolving cryptocurrency landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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