Singapore-based Crypto.com sues US SEC

Singapore-based crypto trading platform Crypto.com has reportedly filed a lawsuit against the US Securities and Exchange Commission (SEC). The platform has alleged that the agency is overstepping its jurisdiction by regulating the crypto industry.

This comes after the trading platform received a ‘Wells notice’ from the top US markets regulator, signalling the SEC’s intention to take enforcement against the company on grounds that tokens traded on its platform qualified as securities.

A Wells notice is a formal announcement that signals that the SEC is planning to bring an enforcement action against a company.

Lawsuit allegations

Crypto.com alleges in the lawsuit that the US SEC is expanding its jurisdiction beyond legal limits and is continuing with an unauthorised and unfair regulatory campaign.

Crypto.com in a statement, said, “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.”

The crypto trading platform’s CEO Kris Marszalek said on X (formerly Twitter, “This unprecedented action by our company against a federal agency is a warranted response to the SEC’s regulation by enforcement regime which has hurt more than 50 million American crypto holders.”

In another post, he said, ““The SEC’s unauthorized overreach and unlawful rulemaking regarding crypto must stop.”

The Singapore-based platform has filed the case in Texas’ Tyler federal court, which names SEC Chair Gary Gensler and four more commissioners as defendants. Moreover, the company has filed a separate petition with the Commodity Futures Trading Commission (CFTC) and the SEC.  This petition seeks to confirm exclusive regulation by the CFTC of certain crypto derivative products.

Crypto industry VS the US SEC

Companies in the crypto business have long accused the US SEC of overstepping its jurisdiction, whereas the regulatory body has claimed that the industry is flouting norms and security laws built to protect investors and other market participants.

Crypto.com is not the first crypto trading platform to have received the Wells notice. Prior to Crypto.com, companies including retail trading platform Robinhood’s crypto business, crypto exchange Coinbase and NFT marketplace OpenSea, have received similar notices from the SEC.