What to Take Away
- The cryptocurrency exchange Crypto.com has filed a lawsuit against the SEC, claiming that the agency has exceeded its legal authority in regulating the cryptocurrency industry.
- The SEC sent Crypto.com a Wells Notice on Tuesday, informing the recipient that the SEC is considering taking formal legal action against it. The lawsuit was filed after the Wells Notice was sent.
According to the lawsuit filed by Crypto.com, the SEC has applied securities law inconsistently to cryptocurrencies, claiming that other cryptocurrencies should be given more leeway than bitcoin and Ethereum’s token.
Following receiving a Wells Notice earlier this year, the blockchain technology company Consensys also filed a preemptive lawsuit against the SEC.
According to Crypto.com, the lawsuit comes in response to a Wells Notice that the SEC sent to the company in August, which is a letter that indicates the SEC’s intention to bring an enforcement case against the crypto startup. The lawsuit was initiated in response to Crypto.com’s concern that the SEC’s actions overstep legal boundaries and undermine the future of the crypto industry in the United States.
The core of Crypto.com’s lawsuit asserts that the SEC has unilaterally extended its jurisdiction beyond legal limits, particularly by classifying the majority of cryptocurrency transactions as securities dealings.
SEC is alleged to be inconsistent in the Crypto.com lawsuit.
Despite their apparent similarity to other crypto assets, the company asserts that this regulatory position is applied inconsistently, excluding bitcoin (BTCUSD) and ether (ETHUSD). In the lawsuit, Crypto.com also emphasized that the SEC omitted crucial procedural steps, such as the Administrative Procedure Act’s notice and comment rulemaking requirements.
According to Crypto.com, the purpose of this lawsuit is to put an end to what it considers the SEC’s “unlawful” campaign against the crypto industry.
In addition, Blockchain technology company Consensys filed a preemptive lawsuit against the SEC earlier this year after receiving a Wells Notice. Crypto.com has also filed a petition with the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to establish a clearer regulatory framework for cryptocurrency derivatives in the United States.
