⚡ Crypto.com Goes to War with SEC and Gary Gensler
posted 8 Oct 2024
Crypto exchange Crypto.com has launched legal action against the U.S. Securities and Exchange Commission (SEC), stating that it is joining the fight alongside other industry players to protect the future of the crypto industry in the United States.
The team at Crypto.com argues that the SEC’s enforcement actions are seen as excessive and unfair by the market.
The SEC’s overreach persists,
However, it’s important to note that the SEC’s classifications are selective—for instance, Bitcoin (BTC) and Ethereum (ETH) are not considered securities.
Read more: What the SEC Wants and Why It Won't Get It
Additionally, the SEC’s approach did not follow the notice-and-comment process required by the Administrative Procedure Act.
U.S. law allows any market participant to request an official determination from both the SEC and the CFTC on whether a company’s product is classified as a "swap," a "security-based swap," or a "mixed swap."
Regulators are required to reach a consensus within 120 days and either provide a coordinated response or justify their refusal to issue a joint interpretation.
Crypto.com Source: Crypto.com
This lawsuit is a direct response to the Wells Notice issued by the SEC, which is a formal notification indicating the results of an investigation, usually followed by enforcement actions for alleged violations.
The team at Crypto.com argues that the SEC’s enforcement actions are seen as excessive and unfair by the market.
The SEC’s overreach persists,
despite bipartisan indications that the next Administration will take a more constructive and effective approach to advancing crypto in the U.S.,the company emphasized.
Crypto.com claims that the SEC has exceeded its legal authority by classifying nearly all crypto assets as securities, regardless of how they are sold.
However, it’s important to note that the SEC’s classifications are selective—for instance, Bitcoin (BTC) and Ethereum (ETH) are not considered securities.
Read more: What the SEC Wants and Why It Won't Get It
Additionally, the SEC’s approach did not follow the notice-and-comment process required by the Administrative Procedure Act.
We seek to stop the SEC’s illegal actions in excess of their authority and in violation of federal law in their tracks,said the Crypto.com team.
It appears that Crypto.com is attempting to set a legal “trap” for the SEC. The company has also reached out to both the SEC and the CFTC, requesting “to confirm via joint interpretation that certain cryptocurrency derivative products are solely regulated by the CFTC.” In simple terms—“Is this really under your jurisdiction, Mr. Gensler?”
U.S. law allows any market participant to request an official determination from both the SEC and the CFTC on whether a company’s product is classified as a "swap," a "security-based swap," or a "mixed swap."
Regulators are required to reach a consensus within 120 days and either provide a coordinated response or justify their refusal to issue a joint interpretation.
Crypto.com is committed to using all regulatory tools available to help bring certainty to the industry, including this petition for joint rulemaking,the company concluded.
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