Crypto.com sued the US SEC (Securities and Exchange Commission) on October 8, 2024, claiming that it intends to fight against overreach and unlawful regulatory actions. This lawsuit stands against the SEC’s stance regarding the cryptocurrency business. Currently, the company’s lawsuit has focused on not only safeguarding 50 million crypto holders but also the current regulatory regimes.
Crypto.com’s Response to a Wells Notice and Unilateral Rulemaking
Crypto.com sued the SEC as a response after the commission issued it a Wells notice, a formal notice of enforcement actions. The company has reiterated the SEC’s intent to overreach by diving into areas not covered under statutes coupled with a non-transparent rule-making regime. At the core of Crypto.com’s legal fight is the SEC’s classification of all crypto assets as securities, no matter how much they resemble Bitcoin and Ethereum, which remains exempt from such categorization.
Crypto.com’s defense has been that the SEC’s methods in the enforcement have not provided the requisite notice and statutes provided by the APA (Administrative Procedure Act), making the enforcement legally flawed.
Advocating for a Clear Regulatory Framework
Crypto.com has also filed a petition with the CFTC (Commodity Futures Trading Commission) and the SEC to give a better understanding of the classification of some of the derivatives of crypto. This move is intended to properly make the necessary changes to the regulatory framework and facilitate the co-regulation of rule-making to establish legal certainty in the sector.
Furthermore, Crypto.com has outlined that settlement processes must be transparent with the approval of regulatory authorities. The company is seeking collaboration between agencies for a more helpful approach to regulating cryptocurrencies in the US.
Commitment to Compliance and Industry Standards
Crypto.com goes a long way in demonstrating its compliance, indicating that it has registered with FinCEN as a money services business and has been designated as DCO by the CFTC. The company claims it follows more than one hundred laws and regulations and has always valued compliance since its establishment in 2016.
The consequences of the legal battle between Crypto.com and the SEC will affect the future of the overall US crypto market. If it wins the case, the SEC will be limited regarding enforcement and promote a more coherent regulatory approach.
