Crypto.com Files Lawsuit Against SEC After Receiving Wells Notice

Crypto.com has filed a lawsuit against the US Securities and Exchange Commission (SEC) just over a month after receiving a formal warning from the regulator

In a statement, the crypto exchange said it is suing the SEC to "protect the future of the crypto industry in the US" following the receipt of a Wells Notice on 22 August.

A Wells Notice is usually sent ahead of launching a formal lawsuit. OpenSea, Coinbase, Uniswap Labs, Ripple, Robinhood, Consensys, and BUSD issuer Paxos are among those in the increasing list of crypto firms that have received such notices.

Crypto.com claims that the SEC is overstepping its authority in regulating the cryptocurrency industry. "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 no matter how they are sold, whereas identical transactions in Bitcoin (BTC) and Ethereum (ETH) are somehow not," the exchange explained in the statement.

The lawsuit further states that Crypto.com "seeks declaratory and injunctive relief to prevent the SEC from unlawfully expanding its jurisdiction to cover secondary-market sales of certain network tokens sold on the company's platform."

Kris Marszalek, Crypto.com's CEO, said the lawsuit is "a warranted response to the SEC's regulation by enforcement regime which has hurt more than 50 million American crypto holders."

Additionally, Crypto.com filed a petition with the Commodity Futures Trading Commission (CFTC) and SEC "to confirm via joint interpretation that certain cryptocurrency derivative products are solely regulated by the CFTC."

Crypto.com recently announced a major expansion of its retail services, offering seamless fiat deposit and withdrawal options for millions of users worldwide. This move is powered by a strategic partnership with global banking giant Standard Chartered.

The exchange also inked a deal with PayPal to offer crypto purchases for users in the United States. The feature allows users to connect their PayPal and Crypto.com wallets to transfer funds from the former to the latter to buy cryptocurrencies.

Under the partnership, eligible users will be able to use their PayPal accounts as an alternative payment method for crypto purchases and to top up their Crypto.com Visa card.