Today, Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) to defend the future of the crypto industry in the United States. Joining several industry peers in standing up to a federal agency that, in the view, is overstepping its legal authority and taking misguided actions.
The decision follows the receipt of a Wells notice from the SEC, a clear indication that the Commission continues its unauthorized and unjust approach of regulating through enforcement, despite bipartisan signals that the next Administration will adopt a more constructive stance toward advancing crypto in the U.S. At present, dealing with improper SEC enforcement actions has become a part of running a legitimate, regulated crypto business in the U.S. While filing a lawsuit against a federal agency is unprecedented for the company, the actions taken by the SEC have left us with no alternative.
The lawsuit challenges the SEC’s unilateral expansion of its authority beyond the limits established by law. Additionally, The SEC has created an unlawful rule by declaring that nearly all cryptocurrency transactions are securities trades, regardless of how the assets are sold. This stance contradicts the treatment of bitcoin (BTC) and ether (ETH), which are not classified as securities even when traded in a similar manner to other crypto assets.
The SEC’s rule never underwent the required notice-and-comment process mandated by the Administrative Procedure Act. Moreover, the application of this rule is arbitrary, particularly when the crypto assets in question share nearly identical characteristics with BTC and ETH and are sold in the same way.
The aim to stop the SEC’s overreach and actions that violate federal law.
You can access the full details of the lawsuit [here].
In addition, Crypto.com | Derivatives North America (CDNA) has submitted a petition to both the CFTC and SEC, requesting a joint interpretation to confirm that certain cryptocurrency derivatives fall under the exclusive regulation of the CFTC. This petition is part of the broader efforts to bring regulatory clarity to the industry through all available legal avenues. The Dodd-Frank Act provides for joint rulemaking, enabling any market participant to ask whether a product is classified as a “swap,” “security-based swap,” or “mixed swap.” Under these rules, the agencies have 120 days to either issue a jointly approved interpretation or provide a written explanation for denying the interpretation. They must also consult with the Federal Reserve Board of Governors during this process.
In the U.S., Crypto.com is a registered money services business with the Financial Crimes Enforcement Network (FinCEN) and holds over 40 state money transmitter licenses that allow us to operate. Furthermore, the affiliate CDNA is registered as a designated contract market (DCM) and derivatives clearing organization (DCO) with the CFTC. These registrations and licenses underscore the dedication to compliance with U.S. regulations.
They firmly believe that security and compliance are essential for mainstream cryptocurrency adoption. Since its founding in 2016, Prioritized compliance has helped it secure more than 100 regulatory approvals globally. These approvals, alongside the industry-leading safety and security certifications, demonstrate the commitment to building regulatory frameworks suited to today’s digital economy.
The internationally recognized regulatory compliance and the recent favorable court rulings against the SEC’s overreach place them in a strong position to challenge their actions. Although it’s unfortunate that legal action is necessary, The U.S. judicial system provides a check on the SEC’s arbitrary approach to crypto. They are optimistic that the court will validate the claims and reaffirm the compliant business practices, benefiting the customers and the entire U.S. crypto industry.
Meanwhile, it's business, as usual at Crypto.com, to continue working toward the vision of putting crypto in every wallet.