Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), joining a growing list of cryptocurrency companies protesting the regulator’s approach to crypto assets.
The legal action is in response to what the company describes as the SEC's overreach in regulating the cryptocurrency industry.
For now, Crypto.com assures customers that operations will continue as normal as the company challenges the SEC’s stance in court.
The move comes after Crypto.com received a Wells notice from the SEC, which is a warning that it could face enforcement action. However, receiving a notice does not mean the company has committed any wrongdoing.
Crypto.com argues that the SEC’s measures overstep its legal boundaries, despite signals from political leaders that the next administration may adopt a more favorable stance toward the cryptocurrency sector.
Similar Wells notices have also been issued for NFT marketplace OpenSea, cryptocurrency exchanges Coinbase (NASDAQ:COIN) and Kraken, as well as popular trading app Robinhood (NASDAQ:HOOD).
In its lawsuit, Crypto.com claims the SEC has illegally expanded its jurisdiction by designating most crypto assets as securities, excluding major coins like Bitcoin and Ether. The company argues that this classification was made without due process and lacks a consistent rationale, as transactions in many crypto assets resemble those of BTC and ETH.
Separately, Crypto.com has filed a petition with the Commodity Futures Trading Commission (CFTC) and the SEC to clarify which agency has regulatory authority over certain crypto derivatives products. The Singapore-based company argues that these products fall under the CFTC’s sole jurisdiction, seeking a clearer regulatory framework for the industry.
The exchange, however, further explained its registration with the Financial Crimes Enforcement Network (FinCEN) and its more than 40 state money transmitter licenses in the U.S. The exchange also pointed to its designation as a contracts marketplace and clearing organization with the CFTC.
“We are proud to be the global industry leader in security licensing, registration and certification – maintaining over 100 regulatory approvals to operate in jurisdictions around the world and helping design purpose-built regulatory frameworks and today’s digital economy, along with best-in-class security and safety certifications,” the exchange added.
According to CCData, Crypto.com saw its spot and derivatives trading volumes increase by more than 40% month-on-month in September. So far this year, the exchange has seen its biggest increase in spot trading, increasing its market share to 10.5%.
