Crypto.com, Scrutinized by SEC, Counters Agency with Lawsuit

Centralized exchange crypto.com sued the U.S. Securities and Exchange Commission shortly after receiving a Wells Notice from the agency.

The Securities and Exchange Commission issued a Wells Notice against crypto.com, informing the digital asset trading venue of potential enforcement actions. SEC prosecutors deliver a Wells Notice when the agency suspects securities violations have occurred. After sending a notice to a company, the SEC may or may not choose to continue litigation.

In response to the regulatory document, crypto.com crypto.com/company-news/complaint” target=”_blank” rel=”nofollow”>filed a lawsuit to prevent the SEC from unilaterally expanding its jurisdiction “beyond legal limits.”

The firm said it would join its industry peers in solidarity against the securities regulator and actively defend itself against what it called a misguided federal agency. According to Kris Marszalek, CEO of crypto.com, the SEC must respect court rulings and rein in its unauthorized overreach into cryptocurrencies.

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Tension between the cryptocurrency industry and the SEC has increased in recent months, ahead of the US presidential election. For years, digital asset advocates have lamented the agency's lack of clear rules.

The SEC, chaired by Gary Gensler, has consistently accused crypto companies of ignoring securities laws and refusing to comply with them. Gensler's approach has led to a series of Wells strikes against companies such as Uniswap, OpenSea and Robinhood. SEC prosecutors have also taken regulatory action against Bittrex and Coinbase, among other crypto services operators.

Despite Gensler's relentless approach, US courts have dismissed some SEC claims, including the Ripple case. The Wall Street regulator also removed the term “crypto asset securities” from the lawsuits, admitting it was never a real term, in an amended proposed filing against Binance.

Additionally, the agency dropped allegations that a stablecoin issued by Paxos was an unregistered security, ending uncertainty surrounding stablecoins in the United States.