Crypto.com is suing the SEC after receiving a legal threat from the US regulator

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Crypto.com has sued the US securities regulator for overstepping its authority after the cryptocurrency exchange said it was facing a lawsuit from the agency over potential unregistered token sales.

The Singapore-based exchange said on Tuesday it had received a so-called Wells notice, which warns that a company could soon face legal action, from the Securities and Exchange Commission.

It has become the latest crypto company caught in the sights of the SEC, which is going after many of the industry’s biggest names for allegedly violating US securities laws by offering unregistered securities.

The regulator launched cases against exchanges Coinbase, Kraken, Binance and Gemini, payments provider Ripple Labs and blockchain software company Consensys. Robinhood, the broker, said in May that it too had received a Wells notice.

But Crypto.com said it was launching its own legal proceedings against the watchdog “to protect the future of the crypto industry in the US.”

“The SEC’s unauthorized approach and illegal regulation of crypto must stop,” said Kris Marszalek, CEO of Crypto.com.

Crypto executives and investors have labeled the SEC’s approach “regulation by enforcement,” and many of them have rallied to publicly and financially support Donald Trump’s bid for the US presidency in hopes that he will usher in a more crypto-friendly era.

The Republican candidate has promised to fire Gary Gensler, the head of the SEC, and end the “persecution” of the crypto sector, while launching his own digital asset company.

Crypto.com said it is being pursued by the SEC for selling 10 so-called network tokens, which are currencies tied to a specific blockchain. These include solana, cardano and Binance BNB tokens, it said, arguing that these tokens should not be treated differently from the popular coins bitcoin and ether.

“The SEC has no jurisdiction over these sales and cannot legally regulate (them),” Crypto.com said in the lawsuit, which was filed against the SEC, Gensler and the other four SEC commissioners.

The exchange group was founded in 2016 and offers trading of over 350 digital assets as well as a prepaid Visa card. The company focuses on retailers and has sponsored many entertainment events, including the Champions League soccer tournament, Formula 1 racing, and recently launched an ad featuring rapper Eminem.

“We continue to be very bullish on the US crypto market and our imminent plans to expand our offerings for US customers,” Marszalek told X.

The company said it has also filed a petition with the SEC and the Commodity Futures Trading Commission to push for certain crypto derivatives to be regulated only by the CFTC.

In June 2023, Crypto.com closed its venue to institutional traders, blaming limited demand.