Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission, alleging that it has overstepped its authority in overseeing the digital-asset industry. This lawsuit came after Crypto.com issued a Wells Notice a few weeks ago. Crypto.com has requested a jury trial to defend itself and cryptocurrencies in the United States.
The major issue that the firm is seizing is that the SEC has been overstepping its authority. Crypto.com allegations show that the SEC is trying to enforce regulations for which proper legal backing is lacking. The exchange now joins other industry players challenging the federal agency’s detrimental approach.
Challenging the Jurisdiction of the SEC?
One of the focuses of Crypto.com’s lawsuit is its argument that the SEC unilaterally expanded its jurisdiction beyond the law. A second important aspect of this lawsuit is that the SEC has assessed most crypto asset trades as securities transactions. Crypto.com has termed this position inconsistent with the fact that assets such as Bitcoin and Ethereum are exempt.
It also claims that the SEC has violated the Administrative Procedure Act. Crypto.com argues that the SEC has failed to give the requisite notice and comment period for instituting this rule. The firm reiterates that the SEC is acting arbitrarily and capriciously, and its actions are not based on sufficient legal underpinning.
Crypto.com’s Affiliate Seeks Clarity From CFTC and SEC
In conjunction with the lawsuit, Crypto.com affiliate Crypto.com | Derivatives North America LLC-aka CDNA has filed a petition with the Commodity Futures Trading Commission. CDNA has also filed another petition with the SEC to join in interpreting how certain crypto derivative products fall under the auspices of the two.
Crypto.com maintains that it is committed to compliance. The firm is registered as an MSB with FinCEN and has over 40 state money transmitter licenses. In this case, the CDNA is similarly registered as a DCM and DCO with the CFTC.
Will This Be a Crypto Regulation Test Case?
The Crypto.com lawsuit comes against decidedly heightened tensions between the SEC and the crypto industry. The case would, therefore, be able to draw some line in the sand. This is whereby it could lay the case to rest once and for all and offer a most conducive environment.
Crypto.com believes that the recent court rulings against the SEC have strengthened its position. The exchange also trusts that its claims would be justified within the United States through the courts. Meanwhile, the Singapore-based exchange tries to reassure its clients that the legal fight does not disrupt operations.
Crypto.com remains committed to its vision of ‘cryptocurrency in every wallet.’ By taking this action against the SEC’s illegal actions, the exchange is building a safer, more compliant future of cryptocurrency.
This case represents the latest salvo in an ongoing debate over how cryptocurrency should be regulated in the United States. Crypto.com’s challenge to the SEC’s approach hopefully protects it from perceived overreach that could have damaged the industry.
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