Crypto.com Files Lawsuit Against SEC and Gary Gensler
Crypto.com has filed a complaint against the U.S. Securities and Exchange Commission (SEC), including its chairman Gary Gensler and the agency’s four other commissioners. The platform has also submitted a joint petition with the SEC and the Commodity Futures Trading Commission (CFTC) seeking clarification on the regulation of cryptocurrency derivatives, arguing that they should be exclusively supervised by the CFTC.
This legal battle announcement has had a negative impact on the native token Cronos (CRO), which dropped 5% after a social media post by Crypto.com CEO Kris Marszalek.
In a major development for the crypto industry, Crypto.com has filed a complaint against the U.S. Securities and Exchange Commission (SEC), including its chairman Gary Gensler and the agency’s four other commissioners.
This action follows the receipt of a Wells Notice sent by the SEC, a formal warning that the regulator is considering enforcement action against the cryptocurrency exchange platform.
The Stakes in the Conflict Between Crypto.com and the SEC
Crypto.com, operated by Foris DAX Inc., registered in the state of Delaware, aims to obtain injunctions to prevent what it describes as an ‘illegal’ attempt by the SEC to expand its jurisdiction. The core of the legal battle is to prevent the financial authority from extending its regulation to secondary market sales of certain network tokens sold on the Crypto.com platform.
Historically, the SEC has focused on the initial issuance of tokens, sometimes equating them with securities subject to strict regulations. However, Crypto.com claims that the SEC is crossing a line by seeking to regulate secondary market transactions, an area where regulators have not yet established firm control. The company believes that this extension of jurisdiction has no solid legal basis.
A Call for Regulatory Clarification
In addition to this lawsuit, Crypto.com has taken proactive steps by filing a joint petition with the Commodity Futures Trading Commission (CFTC) and the SEC. This petition seeks clarification from both regulators regarding the supervision of cryptocurrency derivatives. Crypto.com aims to establish that these products fall exclusively under the jurisdiction of the CFTC and not the SEC, further bolstering its argument against the excessive reach of the latter.
Reactions and Market Impact
This unprecedented action by our company against a federal agency is a justified response to the SEC’s regulatory regime that has harmed over 50 million American cryptocurrency holders.
The announcement of this legal battle has had an immediate impact on Cronos (CRO), the native token of the Cronos blockchain developed in partnership with Crypto.com. After a message was published on the social media platform X (formerly Twitter) by CEO Kris Marszalek, CRO dropped nearly 5%.
Complex Regulatory Context
This conflict arises in an increasingly tense context between U.S. regulators and the cryptocurrency industry. Gary Gensler, the head of the SEC, has been a central figure in the effort to increase crackdowns on crypto companies, repeatedly stating that the majority of crypto tokens should be considered securities.
However, the crypto industry and many companies, including Crypto.com, contest this interpretation, arguing that cryptocurrencies operate on decentralized protocols that do not fit into the same categories as traditional securities.
