Crypto.com now responds to its SEC wells notice with a lawsuit, claiming the agency has expanded its jurisdiction beyond statutory limits.
The U.S. Securities and Exchange Commission (SEC) issued a Wells Notice to Crypto.com today, marking a significant move against the second-largest centralized exchange by trading volume.
In response, Crypto.com announced its intention to sue the SEC.
The exchange claims that the SEC has improperly expanded its authority beyond legal boundaries and has implemented an unlawful rule stating that nearly all crypto asset transactions are classified as securities transactions, regardless of how they are conducted.
They argue that similar transactions involving Bitcoin (BTC) and Ether (ETH) are treated differently.
This notice is part of a broader trend, as the SEC has issued similar Wells Notices over the past two years to various companies in the crypto space, including NFT marketplace OpenSea, investment platform Robinhood, and centralized exchange Coinbase.
A Wells Notice serves as a formal communication alerting the recipient about an investigation and potential legal action from the SEC.
Crypto.com CEO Kris Marszalek emphasized that this lawsuit is a necessary reaction to what he describes as the SEC’s “regulation by enforcement” approach, which he believes has adversely affected over 50 million American cryptocurrency holders.
Marszalek stated, “The SEC’s unauthorized overreach and unlawful rulemaking regarding crypto must stop.
Recent rulings have clarified that crypto itself is not a security and should not be considered an investment contract just because it is traded.”
With this lawsuit, Crypto.com joins a growing list of companies challenging the SEC’s enforcement practices.
Other firms, including Consensys and Coinbase, have also decided to take legal action against what they perceive as the SEC’s unlawful measures, and their lawsuits are currently in progress.
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Also Read: The SEC Is Now Under Massive Scrutiny Following XRP Appeal
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