Crypto.com Initiates Legal Action Against SEC to Safeguard the Future of Cryptocurrency in the US, Reports TradingView News

Prominent digital asset exchange and services company Crypto.com is initiating a court case against the US Securities and Exchange Commission, aiming to defend the interests of the cryptocurrency sector within the nation.

On Oct. 8, Kris Marszalek, a founding partner and the CEO of Crypto.com, announced via X that the organization has commenced legal proceedings against the US SEC.

“We are compelled to take this groundbreaking stance against a governmental body in light of the SEC’s approach to regulation through enforcement, a methodology that has adversely impacted over 50 million crypto users in America,” he stated.

“Through this litigation, we seek to safeguard the American crypto ecosystem’s future, joining the concerted efforts of our contemporaries who are asserting their rights and challenging the misguided actions of an agency operating outside its lawful bounds,” read Crypto.com’s formal statement.

Marszalek committed to leveraging “every regulatory mechanism at our disposal” to foster clarity within the sector through proper regulatory creation. Crypto.com has reached out to both the US Commodity Futures Trading Commission and the SEC to secure a confirmation in the classification of crypto derivative products.

Crypto.com is responding to a Wells notice it received from the SEC

The official communication disclosed that Crypto.com’s legal action came subsequent to receiving a Wells notice from the commission.

The exchange expressed that the SEC’s conduct exemplifies its continued unwarranted regulation through enforcement, despite bipartisan signals that a forthcoming Administration could adopt a more positive and effective strategy.

Crypto.com stated:

“Currently, dealing with such improper enforcement by the SEC is part of doing business as a genuine, registered crypto enterprise in the US. As such, when faced with no alternatives, our hand is forced to instigate this legal challenge against the federal agency,”

The lawsuit challenges the SEC’s purported inappropriate extension of its authority.

Furthermore, the exchange argues that by the SEC’s own rules, transactions in almost any digital asset are considered securities trades, independent of how they are conducted.

Despite the SEC’s Wells notice, Crypto.com affirms that it is operating its regular business and is committed to its mission of “mainstream cryptocurrency adoption.”

Crypto.com seeks to ascertain the exclusive CFTC regulation over specific crypto products

In addition, Crypto.com petitioned for a combined interpretation from the CFTC and SEC that would clearly determine certain crypto derivative products as being exclusively regulated by the CFTC.

Referencing the collaborative rulemaking processes laid out in the Dodd-Frank Act, Crypto.com emphasized that any market entity has the right to inquire if a product is a “swap,” a “security-based swap,” or a “mixed swap.”

“Under these procedural guidelines, the agencies have a 120-day timeline to issue either a jointly endorsed interpretation or to forgo such an interpretation,” according to Crypto.com.

Should the entities decline to offer an interpretation, they must provide reasoning for this decision.

“Furthermore, both agencies are required to consult with the Federal Reserve’s Board of Governors and may also engage in joint rulemaking in coordination with the Fed,” added Crypto.com.