Crypto.com Counter Sues SEC, Accuses the U.S. Agency of Regulatory Overreach
Crypto Industry Demands Clarity Amid Growing List of Platforms Targeted by SEC’s Regulatory Crackdown
In an unprecedented move on October 8, cryptocurrency trading platform crypto.com sued the U.S. SEC and Gary Glasner for regulatory overreach following receiving a Wells Notice indicating the agency’s intention to sue the digital-asset exchange for operating as an unregistered broker-dealer and securities clearing agency.
The company says the Securities Exchange Commission has overstepped its authority by claiming most crypto transactions are securities while excluding similar transactions with Bitcoin and Ethereum.
Crypto.com Counter Sues SEC
Crypto.com CEO Kris Marszalek, on his X page, announced that the platform was countersuing the U.S. SEC, claiming that the agency’s enforcement regime is hurting over 50 million American crypto holders.
“The SEC’s unauthorized overreach and unlawful rulemaking regarding crypto must stop. Recent rulings have made clear that crypto is not a security and thus is not an investment contract simply because it changes hands.”, he stated.
He added that the platform remains bullish in the U.S. crypto market and plans to expand its services further.
In an official statement, the platform also argues that it implemented the rules without the mandatory notice and comment period required by the Administrative Procedure Act, labeling the enforcement as “arbitrary and capricious.”
SEC’s Toughening Regulatory Stance
Crypto.com joins the growing list of crypto trading platforms, such as OpenSea, Binance, Robinhood, Uniswap, and Consensys, that received Wells notices earlier this year.
SEC chair Gary Glasner believes that nearly all cryptocurrencies are securities and are, therefore, subject to stringent regulations like traditional trading platforms.
Conversely, these platforms argue that crypto assets fundamentally differ from traditional financial products like stocks and bonds, which U.S laws define as securities.
Many of these platforms have begun fighting back at what they term “unauthorized and unjust regulations” that nearly all cryptocurrencies are securities.
Crypto.com has issued SEC and CFTC petitions requiring them to clarify how crypto derivatives are regulated. Under the Dodd-Frank Act, the agencies have 120 days to issue a jointly approved interpretation or to deny it with a written explanation.
