Crypto.com Sues US SEC After Receiving Legal Threat from Regulator

A Wells notice is a formal declaration that the regulator's staff intend to recommend an enforcement action.

By Reuters | Updated: 9 October 2024 17:00 IST

Crypto.com Sues US SEC After Receiving Legal Threat from Regulator

Photo Credit: Reuters

Crypto.com's case, filed in a federal court in Tyler, Texas

Highlights

A Wells notice indicates recommending an enforcement action
Robinhood, Coinbase, OpenSea have received Wells Notice from SEC
The SEC has not reacted to the development as of now

Crypto.com filed a lawsuit against the US Securities and Exchange Commission on Tuesday, alleging that the federal agency is overstepping its jurisdiction by regulating the cryptocurrency industry.

The crypto trading platform said its move follows the receipt of a "Wells notice" from the top US markets regulator on the grounds that tokens traded on its platform qualified as securities.

A Wells notice is a formal declaration that the regulator's staff intend to recommend an enforcement action. The SEC declined to comment.

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Crypto companies have long accused the SEC of overreach and of violating its jurisdiction, while the agency has claimed that the industry is flouting securities laws intended to protect investors and other market participants.

"Our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions," Crypto.com said.

Retail trading platform Robinhood's crypto business, major US crypto exchange Coinbase and NFT marketplace OpenSea are among the companies in the digital assets industry that have received similar notices from the SEC.

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Crypto.com's case, filed in a federal court in Tyler, Texas, also names SEC Chair Gary Gensler and four other commissioners as defendants.

Separately, the company has filed a petition with the Commodity Futures Trading Commission and the SEC, seeking a joint interpretation to confirm that certain cryptocurrency derivative products are exclusively regulated by the CFTC.

The CFTC did not immediately respond to a Reuters request for comment.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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