crypto.com Exchange Challenges SEC with Lawsuit Over Wells Notice
Popular cryptocurrency exchange Crypto.com has taken Legal action against the US Securities and Exchange Commission (SEC) following a recent Wells Notice received from the regulator. This move by Crypto.com is part of a broader trend of crypto stakeholders pushing back against what they perceive as overreach from regulatory bodies.
Crypto.com Takes Legal Action
The lawsuit filed by Crypto.com targets SEC Chairman Gary Gensler and four commissioners in response to the Wells Notice sent to the company. The court filing was initiated by Foris DAX Inc, a Delaware-based firm operating under Crypto.com’s business name.
A Wells Notice is a formal notification from the SEC alerting the recipient of potential enforcement actions being planned by the agency. In Crypto.com’s case, the SEC believes the exchange may have violated securities laws. However, Crypto.com disputes this claim, calling it “unauthorized and unjust Regulation.”
In its complaint against the SEC, Crypto.com argues that the regulator exceeded its authority by considering most crypto transactions as securities. The company also contends that the SEC implemented this rule without following the necessary statutory notice and comment period required by the Administrative Procedure Act.
Crypto.com seeks declaratory and injunctive relief to prevent the SEC from expanding its jurisdiction to cover secondary-Market sales of certain tokens on its platform. The legal action is part of the exchange’s efforts to challenge what it views as regulatory overreach by the SEC.
As a result of the lawsuit, the Price of Cronos (CRO), the native Token of the Cronos blockchain developed in collaboration with Crypto.com, dropped by 4.7%. At the time of writing, CRO is down 6% in the past day, trading at $0.0755.
SEC Facing Backlash from Crypto Community
This legal action by Crypto.com comes on the heels of a petition from members of the XRP community expressing dissatisfaction with the SEC’s decision to continue its litigation against Ripple Labs. The XRP Army, as the community is known, believes that the SEC's actions are harming the broader crypto market.
The XRP community petition accuses the SEC of straying from its core mission of investor protection and fair market practices. Instead, they argue that the regulator’s ongoing legal battle with Ripple undermines these objectives and negatively impacts investors.
In a separate incident, token holders of Veritaseum (VERI) have filed a bar complaint against SEC executive Jorge G. Tenreiro, alleging misconduct and overreach in the cases in which he has been involved. These actions reflect the growing scrutiny and challenges the SEC is facing within the crypto industry.
The lawsuit filed by Crypto.com and the petitions from various crypto communities signal a growing trend of pushback against regulatory bodies in the Cryptocurrency space. As stakeholders continue to challenge regulatory decisions and enforcement actions, it remains to be seen how these conflicts will impact the future of crypto regulations.
