Crypto.com filed a suit against the US Securities and Exchange Commission after receiving a Wells Notice, marking their entry into ongoing legal battles in the crypto industry.
The legal action was announced by Kris Marszalek on Oct. 8. He is the CEO and founder of Crypto.com.
The SEC was sued by the exchange, which accused the regulator of exceeding its authority through what Marszalek called a “regulation-by-enforcement” approach.
He claimed that the strategy had adversely affected over 50 million cryptocurrency holders in the US.
The SEC issues a Wells Notice to warn of possible enforcement actions for violations of securities law.
It is a way to let the receiver know that regulators are considering the charges and also gives them an opportunity to reply before legal proceedings proceed.
Crypto.com’s main claim is that the SEC illegally exceeded its jurisdiction. The regulator, it claims, has unilaterally implemented a rule that treats nearly all cryptocurrency transactions as securities.
The company claims that the regulatory actions taken by it exceeds the legal limits set forth in law.
Crypto.com announced the suit as an unprecedented step to defend the crypto-industry, and also labelled the SEC’s actions illegal.
Marszalek reiterated the sentiment and said that his company will use “all the regulatory tools at its disposal” in order to clarify the industry through appropriate rulemaking.
A petition has been filed by the company with both the Commodity Futures Trading Commission (CFTC) and SEC in order to categorize crypto derivatives.
Crypto.com has criticized SEC enforcement campaigns, calling them “unjustified” and “unauthorized”.
The exchange maintained that SEC actions are continuing despite indications from both parties that the new US administration could take a more positive stance towards cryptocurrencies.
This company claims that the SEC’s enforcement actions are part and parcel of running a legal crypto business in America, even though they feel “no choice” other than to go through with legal action.
Enforcement of Regulation
Crypto.com is the latest cryptocurrency entity to sue the SEC, joining other large players such as Coinbase and Ripple Blockchain Payments.
The SEC recently targeted several key players in the cryptocurrency industry.
OpenSea received a Wells Notice from the SEC in August. This was the first time that the regulator had targeted an NFT-platform, and it was met by criticisms.
Industry players have expressed concerns about the SEC Chairman Gary Gensler’s enforcement strategy, which they believe is suppressing innovation in crypto.
The Digital Chamber (a trade group for digital assets) condemned earlier this year the SEC’s actions when it sent a Wells Notice to Robinhood Crypto.
The Chamber referred to the notice as a case of regulatory overreach, and demanded legislative intervention.
Gensler was criticized by lawmakers during a hearing before the Congress in September for his approach towards crypto oversight.
Dan Gallagher’s, chief attorney at Robinhood, said that while he supported the SEC, it was because there were already rules in place. He also argued that they had not responded to Robinhood’s attempts to meet registration requirements.
The ICD published the article Crypto.com Sues SEC for Overstepping Legal Limits.
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