Crypto.com Counters SEC with Lawsuit Following Wells Notice

Centralized cryptocurrency exchange Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) shortly after receiving a Wells Notice from the regulatory agency. The SEC issued the notice as a warning of potential enforcement action, a step it typically takes when it suspects violations of securities laws. However, after receiving the notice, Crypto.com responded with a legal counter, aiming to prevent what it calls the SEC’s attempt to expand its jurisdiction “beyond statutory limits.”

Crypto.com is positioning itself alongside other crypto industry players in opposing the SEC’s enforcement tactics. CEO Kris Marszalek emphasized that the SEC should adhere to court rulings and refrain from what he described as “unauthorized overreach” into the cryptocurrency sector.

The crypto industry’s friction with the SEC has intensified as the 2024 U.S. presidential elections approach, with many industry leaders criticizing the lack of regulatory clarity. Under the leadership of SEC Chair Gary Gensler, the agency has consistently accused cryptocurrency businesses of flouting securities laws, leading to a series of enforcement actions. High-profile firms, including Uniswap, OpenSea, and Robinhood, have faced Wells Notices, while Bittrex and Coinbase have been subjected to legal action.

Despite Gensler’s aggressive stance, the courts have ruled against the SEC on some occasions. Notably, the agency’s claims against Ripple were partly dismissed, and it dropped the term “crypto-asset securities” from lawsuits after admitting it was not a legally defined term. Furthermore, the SEC withdrew its allegation that a stablecoin issued by Paxos constituted an unregistered security, offering some relief to the stablecoin sector.

source