Major cryptocurrency exchange and service provider Crypto.com is launching a legal battle against the United States Securities and Exchange Commission with the goal of protecting the future of the crypto industry in the country.
Kris Marszalek, co-founder and CEO of Crypto.com, took to X on Oct. 8 to officially announce that the company has filed a suit against the US SEC.
“This unprecedented action by our company against a federal agency is a warranted response to the SEC’s regulation by enforcement regime, which has hurt more than 50 million American crypto holders,” he wrote.
Source: Kris Marszalek
“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 reads.
Marszalek also promised that the company would use “all regulatory tools available” to bring certainty to the industry through proper rulemaking. Crypto.com has also petitioned the US Commodity Futures Trading Commission and the SEC to confirm categorizing crypto derivative products.
The move follows Crypto.com receiving a Wells notice from the SEC
In the announcement, Crypto.com indicated that its lawsuit against the SEC follows the company’s receipt of a Wells notice from the commission.
According to the exchange, the move by the SEC “illustrates 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.”
Crypto.com stated:
“For now, improper SEC enforcement actions are part of the process of operating a legitimate and licensed crypto business in the US. While this is an unprecedented move for our company to file suit against a federal agency, actions by that agency towards our industry have left us no other choice.”
Crypto.com specified that its lawsuit contends that the SEC has “unilaterally expanded its jurisdiction beyond statutory limits.”
Front page of Crypto.com’s suit against the SEC. Source: Crypto.com
The exchange also argued that the SEC has “established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold.”
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Despite receiving a Wells notice from the SEC, Crypto.com said “it is business as usual” at the platform as it continues on its “pursuit of crypto in every wallet.”
Crypto.com wants to confirm that some crypto products are “solely regulated by the CFTC”
Additionally, Crypto.com filed a petition with the CFTC and SEC to confirm through a joint interpretation that certain cryptocurrency derivative products are “solely regulated by the CFTC.”
Citing joint rulemaking under the Dodd-Frank Act, Crypto.com stressed that any market participant is free to ask CFTC and SEC whether a product is a “swap,” a “security-based swap” or a “mixed swap.”
“Under these joint rules, the agencies have 120 days to either issue a jointly approved interpretation or to deny an interpretation,” Crypto.com stated.
If authorities deny the requested interpretation, they should provide the reasons for not issuing the interpretation.
“The agencies must consult with the Federal Reserve Board of Governors and can also engage in joint rulemaking in consultation with the Fed,” Crypto.com added.