Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) after receiving a Wells Notice, signaling potential future prosecution. The SEC wants to treat most cryptocurrency transactions as securities transactions, increasing tight control over this industry.
Crypto.com is not the first company to file a lawsuit on this issue, but there has been no clear conclusion so far.
Crypto.com CEO responds to the Wells Notice
The incident began on October 8, when the SEC sent a Wells Notice to Crypto.com. A Wells Notice is a statement from the SEC that they have investigated a company and want to prosecute that company. In response, Crypto.com CEO Kris Marszalek announced that he will sue the SEC first.
"This unprecedented action by our company against a federal agency is a proportionate response to the SEC's enforcement-driven regulatory regime, which has harmed over 50 million Americans holding Bit. The SEC's unauthorized encroachment and unlawful rule-making for Bit must be stopped,"
Marszalek said.
Crypto.com's official statement on this lawsuit is direct and initiates a battle against the SEC. It claims that the SEC's improper attacks are "part of the process" of operating a legitimate exchange, and that the regulator's actions towards the industry have left Crypto.com "no choice." It even adds that this prosecution goes against the growing bipartisan consensus supporting Bit.
In summary, Marszalek and Crypto.com have described the upcoming SEC lawsuit as completely unjustified. They claim that the SEC is seeking to treat almost every Cryptoasset transaction as a securities transaction, except for Bit and ETH. The company has even filed a petition with the SEC and CFTC, requesting clear confirmation that certain Cryptoassets are actually commodities.
SEC's battle with exchanges
This proactive move reflects a similar action from ConsenSys in April. In response to the threat of impending prosecution, they also filed a lawsuit against the SEC, over the same concern related to securities transactions. This lawsuit was dismissed at the end of September, and there is still no satisfactory answer to any questions.
Essentially, Marszalek may be right in describing this lawsuit as an action to "protect the future of Bit." Commodity regulations are more lax than securities, and this is a major reason why Bit and ETH are considered commodities. However, if all other assets are subject to higher standards, this will have a major impact on the entire industry.
CRO Price. Source: BeInCryptoCurrently, this legal battle is still in a very early stage. Cronos (CRO), a native Token built on the Crypto.com blockchain, has dropped in price since receiving the Wells Notice. Apart from this rather pessimistic sign, the situation remains unclear. Marszalek and his team may pursue this lawsuit to the end and hope it will clarify the legal status of all exchanges.
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