- Crypto.com is suing the SEC, claiming the regulator overreached in enforcing crypto regulations.
- CEO Kris Marszalek says the lawsuit aims to protect the US crypto industry’s future.
- Crypto.com is also petitioning for clarification on the regulation of crypto derivative products by the CFTC.
Crypto.com, a major cryptocurrency platform, has initiated legal action against the U.S. Securities and Exchange Commission (SEC), challenging the agency’s regulatory approach toward the crypto industry. This move, announced by CEO Kris Marszalek on October 8 via X, comes in response to what the company describes as the SEC’s overreach in regulating crypto assets.
Marszalek stated that Crypto.com’s decision to file a lawsuit is a direct reaction to the SEC’s method of enforcement, which he said has negatively impacted over 50 million crypto holders in the United States. He emphasized that the company is joining other industry players in fighting against what they see as regulatory overreach by the SEC.
Regulatory Dispute Unfolds
Crypto.com’s legal battle follows its receipt of a Wells notice from the SEC, which is often a precursor to enforcement actions. The company claims that the SEC has been acting beyond its authorized limits, applying rules that classify nearly all crypto assets as securities, regardless of how they are traded. In their announcement, Crypto.com contended that these regulatory actions are detrimental to the industry, but the company plans to keep operating normally despite the ongoing legal proceedings.
In addition to the lawsuit, Crypto.com is seeking clarity on the categorization of certain cryptocurrency products. The company filed a petition with both the Commodity Futures Trading Commission (CFTC) and the SEC to confirm that specific crypto derivatives fall under the exclusive regulation of the CFTC, not the SEC.
Seeking Rule Clarification
Crypto.com is relying on the Dodd-Frank Act’s joint rulemaking process, which allows market participants to request clarification on whether a financial product is a swap, security-based swap, or mixed swap. According to the company, the CFTC and SEC have 120 days to respond to the petition with a jointly approved interpretation or a denial.
Crypto.com is hopeful that this process will provide regulatory certainty for the crypto industry in the U.S., ensuring that appropriate agencies are responsible for overseeing specific financial products. The company noted that even with the lawsuit in motion, it remains committed to its goal of “crypto in every wallet.”
