Crypto.com, a cryptocurrency exchange, has filed a lawsuit against the US Securities and Exchange Commission (SEC), its Chairman Gary Gensler, and the four commissioners. This move comes after the company received a Wells Notice, which serves as a warning of potential enforcement action, on August 22. According to Crypto.com's CEO, Kris Marszalek, the lawsuit is intended to 'protect the future of crypto in the US' and is a response to the SEC's 'regulation by enforcement regime,' which has negatively impacted over 50 million American crypto holders.
The lawsuit seeks to prevent the SEC from expanding its jurisdiction to cover secondary-market sales of certain network tokens sold on the exchange, arguing that the SEC is unlawfully defining all network tokens as securities while exempting only Bitcoin and Ethereum. Crypto.com is seeking declaratory and injunctive relief, arguing that it does not operate as an unregistered securities broker-dealer or securities clearing agency.
The company has also filed a petition with the SEC and the Commodity Futures Trading Commission (CFTC) to confirm that certain cryptocurrency derivative products are solely regulated by the CFTC. The SEC has been regulating the crypto sector through a series of enforcement activities, which has been met with resistance from the industry, including companies like Binance, Ripple, and Coinbase. The lawsuit highlights the ongoing debate over the regulation of cryptocurrencies in the US, with the industry calling for bespoke rules to provide clarity for participants.