Unlock Editor’s Digest for free
Roula Khalaf, editor-in-chief of the FT, selects her favorite stories in this weekly newsletter.
Crypto.com has sued the US securities regulator for allegedly overstepping its authority, after the cryptocurrency exchange said it was facing a lawsuit from the agency for potentially selling unregistered tokens.
The Singapore-based exchange said 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 crosshairs of the SEC, which is pursuing many of the industry’s biggest names for allegedly violating U.S. securities laws by offering unregistered securities.
The regulator has 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 had also received notice from Wells.
But Crypto.com said it was launching its own legal action against the watchdog “to protect the future of the crypto industry in the United States.”
“Unauthorized excesses and illegal SEC rules regarding crypto must stop,” said Kris Marszalek, CEO of Crypto.com.
Crypto executives and investors have called the SEC’s approach “regulation by enforcement” and many have mobilized to publicly and financially support Donald Trump’s bid for the US presidency, hoping that it will usher in a more crypto-friendly era.
The Republican candidate vowed to fire SEC chief Gary Gensler and end the “persecution” of the crypto industry, while launching his own digital assets company.
Crypto.com said it was being sued by the SEC over its sale of 10 network tokens, which are coins tied to a specific blockchain. These include Binance’s Solana, Cardano and BNB tokens, he said, arguing that these tokens should not be treated differently from popular Bitcoin and Ether coins.
“The SEC does not have jurisdiction over these sales and cannot legally regulate them,” Crypto.com said in the lawsuit filed against the SEC, Gensler and the four other SEC commissioners.
The exchange group was founded in 2016 and offers trading on over 350 digital assets, as well as a prepaid Visa card. The company focuses on retail traders and has sponsored numerous entertainment events, including the Champions League soccer tournament, Formula 1 races, and recently aired an advert featuring rapper Eminem.
“We remain very optimistic about the US crypto market and our imminent plans to expand our offerings to US customers,” Marszalek said on 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 products to be solely regulated by the CFTC.
In June 2023, Crypto.com closed its platform for institutional traders, citing limited demand.
