Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), accusing the agency of exceeding its statutory authority.
The move follows a Wells notice received by Crypto.com from the SEC, which typically signals the Commission’s intent to bring an enforcement action.
The lawsuit marks a significant escalation in tensions between the SEC and cryptocurrency exchanges, as Crypto.com joins a growing number of industry participants challenging the agency’s approach to regulating the digital asset space.
The lawsuit specifically argues that the SEC has unilaterally expanded its regulatory jurisdiction, treating most crypto assets as securities, except for Bitcoin (BTC) and Ether (ETH). Crypto.com contends that this classification is arbitrary, given that these digital assets share similar characteristics and are traded in comparable ways. The company alleges that this approach violates the Administrative Procedure Act, as it was implemented without the necessary notice-and-comment period required for such significant regulatory decisions.
Crypto.com’s legal filing comes amid broader industry concerns over the SEC’s regulatory tactics, which critics argue have become a form of "regulation by enforcement." By taking legal action, Crypto.com aims to halt what it describes as "illegal" actions by the SEC that go beyond its lawful authority.
In addition to the lawsuit, Crypto.com’s affiliate, Crypto.com Derivatives North America (CDNA), has filed a petition with both the SEC and the Commodity Futures Trading Commission (CFTC). The petition seeks clarification on the regulatory treatment of certain cryptocurrency derivatives, urging the agencies to establish clear rules about which products fall under the purview of the CFTC or the SEC.
Crypto.com emphasized its commitment to regulatory compliance, highlighting its registrations with the Financial Crimes Enforcement Network (FinCEN) and the CFTC, as well as numerous state licenses. The company, a recognized leader in the crypto space for its regulatory approvals and security certifications, maintains that it operates fully within the law.
Despite its legal battle with the SEC, Crypto.com remains confident in its compliance efforts and believes that recent court rulings against the SEC’s claims offer a favorable precedent for its case. The company also expressed optimism that the judicial system will rein in what it sees as the SEC’s overreach, ensuring that its business can continue to operate legally and securely in the U.S.
