Crypto.com Takes Legal Action Against SEC Over Regulatory Authority
On October 8, Crypto.com announced the filing of a lawsuit against the U.S. Securities and Exchange Commission (SEC), challenging what it perceives as the agency’s overreach into the cryptocurrency sector.
Background of the Lawsuit
The legal action follows a Wells notice from the SEC, signaling potential enforcement actions against the company. Crypto.com argues that the SEC is overstepping its legal boundaries by regulating through enforcement rather than adhering to established legal procedures.
Key Arguments of Crypto.com
- Crypto.com claims that the SEC has improperly expanded its jurisdiction, asserting that most crypto asset trades are considered securities transactions, excluding only Bitcoin (BTC) and Ether (ETH).
- The lawsuit contends that this interpretation lacks a lawful basis, as many digital assets share similarities with BTC and ETH.
- Moreover, the SEC’s failure to follow necessary notice and comment periods mandated by the Administrative Procedure Act further supports the claim that its actions are arbitrary and capricious.
Collaborative Efforts with Regulatory Agencies
In conjunction with the lawsuit, Crypto.com’s affiliate, Crypto.com | Derivatives North America (CDNA), has submitted a petition to both the Commodity Futures Trading Commission (CFTC) and the SEC for a joint interpretation. This petition aims to clarify that specific crypto derivative products fall solely under the CFTC’s jurisdiction.
Commitment to Compliance
Crypto.com underscores its adherence to regulatory standards in the U.S., being registered as a money services business with the Financial Crimes Enforcement Network (FinCEN) and holding over 40 state money transmitter licenses. Additionally, CDNA is recognized as a designated contract market and derivatives clearing organization by the CFTC.
Crypto.com’s Vision
“We believe that security and compliance are the foundations of achieving mainstream cryptocurrency adoption. We seek to stop the SEC’s illegal actions in excess of their authority and in violation of federal law in their tracks.”
Looking Ahead
Crypto.com expresses confidence that recent judicial rulings against the SEC regarding other cryptocurrency entities support their position. The company aims to use this legal challenge to clarify the regulatory environment for cryptocurrency businesses.
For now, Crypto.com assures its users that “business is as usual” as it strives for “crypto in every wallet.”
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