Cryptocurrency exchange Crypto.com announced Tuesday that it had filed a lawsuit against the United States Securities and Exchange Commission (SEC), its chairman Gary Genlser, and its four commissioners after receiving a notice that the regulator intends to bring an enforcement action against the company. The legal move, according to Crypto.com, aims to protect the future of the American crypto industry.
Crypto.Com Sues SEC After Receiving Legal Threat From Regulator
Crypto.com has initiated a suit against the Securities and Exchange Commission, claiming that it overstepped its authority by calling most cryptos securities.
In a post sharing the lawsuit news, the exchange revealed that it had been slapped with a Wells notice by the SEC. Wells notices are preliminary warnings informing recipients of the charges the Wall Street watchdog is mulling against them.
“Our decision to sue the SEC follows our receipt of a Wells notice from the Commission staff,” the Crypto.com statement reads, “illustrating that the SEC’s unauthorized and unjust regulation by enforcement campaign continues despite bipartisan indications that the next Administration will take a more constructive and effective approach to advancing crypto in the U.S.”
Crypto.com admitted that filing a lawsuit against the SEC was unprecedented for the company but maintained that the Commission’s actions left them “with no other choice.”
Crypto.com also contends that the SEC has “unilaterally expanded its jurisdiction beyond statutory limits.”
Crypto.Com Accuses SEC Of Overreach
In the suit, Crypto.com accuses the SEC of “inventing the term Crypto Asset Security out of whole cloth to expand its jurisdiction over the digital asset industry.”
“The term has no foundation in the Securities Act or Exchange Act,” it continued, “nor does it resemble any financial instrument defined by those laws.”
The exchange further noted in its suit that the SEC threatened enforcement action against the company “in regard to secondary-market sales of network tokens on its platform.” The agency has targeted popular tokens such as Solana (SOL), Cardano (ADA), Binance Coin (BNB), Filecoin (FIL), Flow (FLOW), Internet Computer (ICP), Cosmos (ATOM), Algorand (ALGO), Near (NEAR), and Dash (DASH).
“We are doing so to protect the future of the crypto industry in the US, joining a series of our peers who are actively defending themselves and taking action against a misguided federal agency acting beyond its authorization under the law,” Crypto.com’s official announcement postulated.
It pays to remember that the SEC has gone after countless prominent crypto-focused firms throughout the tenure of its Chair Gary Gensler, who took office back in 2021. Other major industry targets include Coinbase, Binance, Ripple, and Consensys.