Crypto.com Sues the SEC in Response to “Unlawful” Wells Notice
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The U.S. Securities and Exchange Commission (SEC) today issued a Wells Notice to Crypto.com, the second-largest centralized exchange (CEX) by volume. The CEX immediately responded to the notice, saying it plans to sue the SEC.
“Specifically, 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 no matter how they are sold, whereas identical transactions in bitcoin (BTC) and ether (ETH) are somehow not,” Crypto.com said.
This is the latest in a series of Wells Notices issued over the last two years to companies operating in the crypto industry. The SEC has also distributed these notices to NFT marketplace OpenSea, retail investment platform Robinhood, and centralized exchange Coinbase.
A Wells Notice is a letter that informs the receiving party of an investigation and potential legal action from the SEC.
Hurting Crypto Holders
“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,” CEO Kris Marszalek said on Crypto.com’s response lawsuit.
“The SEC’s unauthorized overreach and unlawful rulemaking regarding crypto must stop. Recent rulings have made clear that crypto is not itself a security and thus is not an investment contract simply because it changes hands,” Marszalek said.
With this lawsuit, Crypto.com joins a list of companies fighting back against the SEC’s “regulation by enforcement” approach. Other entities, including Consensys, and Coinbase, also chose to respond to the “unlawful” action from the SEC through their own lawsuits, which are ongoing.
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