Key Takeaways
- Crypto.com has launched a lawsuit against the U.S. Securities and Exchange Commission.
- The lawsuit criticizes the SEC’s enforcement-based approach to regulating cryptocurrencies.
- Crypto.com argues the SEC implemented this rule without proper public input.
Cryptocurrency exchange Crypto.com announced a lawsuit against the U.S. Securities and Exchange Commission (SEC) on Tuesday, Oct. 8.
This lawsuit, filed “to defend the future of the American crypto industry,” comes in response to the SEC’s ongoing enforcement actions and their perceived overreach.
Crypto.com Sues the SEC
This move follows a Wells notice, signaling the SEC’s continued enforcement-based regulation despite bipartisan support for a more constructive approach.
While litigation against a federal agency is significant, Crypto.com said the SEC’s actions leave it no choice:
“For now, improper SEC enforcement actions are part of the process of operating a legitimate and licensed crypto business in the U.S. While this is an unprecedented move for our company to file suit against a federal agency, actions by that agency towards our industry have left us no other choice.”
The Complaint
The Crypto.com lawsuit alleges that the SEC has overstepped its legal boundaries. It did this by unilaterally expanding its jurisdiction and imposing an arbitrary rule classifying nearly all crypto assets as securities.
This rule contradicts the treatment of Bitcoin (BTC) and Ether (ETH). It allegedly was implemented without the required public input and is unfairly applied.
“This unlawful rule never went through a notice and comment period required by the Administrative Procedure Act. Furthermore, the agency’s application thereof is arbitrary and capricious. Particularly when those crypto assets possess virtually indistinguishable characteristics from and are sold identically as BTC and ETH,” the exchange company said, adding:
“We seek to stop the SEC’s illegal actions in excess of their authority and in violation of federal law in their tracks.”
