Crypto.com files suit against SEC after receiving Wells notice

The lawsuit alleges that the regulator “unilaterally expanded its jurisdiction beyond statutory limits and, separately, the SEC established an illegal rule that transactions in nearly all crypto assets are securities transactions regardless of how they are sold.” according to a statement on Tuesday.

The SEC does not comment on whether or not there is a possible investigation, an agency spokesman said.

The notice is the latest in a string of enforcement actions brought by the SEC against the crypto industry in recent years. Companies such as Kraken, Coinbase, Consensys and Uniswap have all been the target of such notices or lawsuits in the past, with some still involved in legal proceedings.

“SEC overreach and illegal regulation of crypto must stop,” Crypto.com CEO Kris Marszalek wrote on social media platform X.

Today https://t.co/pFc4Pz9nFR filed a lawsuit against the SEC to protect the future of crypto in the US: https://t.co/kXxyhF7zFe

— Chris | Crypto.com (@kris) October 8, 2024

Crypto.com, which formally calls itself Foris DAX Inc., declined to comment further on the lawsuit. Crypto.com was founded in 2016 in Hong Kong and renamed Crypto.com in 2018 after acquiring the domain. Marszalek said in an interview with Bloomberg earlier this year that his platform has more than 80 million registered users.

The lawsuit seeks to prevent the SEC from “unlawfully expanding its jurisdiction to cover secondary market sales of certain network tokens sold on the Crypto.com platform.” CRO, Crypto.com’s token, is down 7.6%, according to data from tracker CoinGecko.

The company’s Crypto.com Derivatives North America unit also filed a petition with the Commodities Futures Trading Commission and the SEC, seeking to confirm through a joint interpretation that certain crypto derivatives are regulated exclusively by the CFTC.

“It’s not surprising to see many crypto businesses turn the tables and preemptively sue the SEC,” Michael Selig, partner at Willkie Farr & Gallagher LLP, wrote on X, commenting on the Crypto.com lawsuit.

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