On Tuesday, digital asset exchange Crypto.com became the latest target of the U.S. Securities and Exchange Commission (SEC), which has increasingly used a regulation-by-enforcement strategy over the past year. This latest action follows the SEC’s previous audit of trading platforms, including Robinhood, just a few months ago.
Crypto.com accuses SEC of overreach
In response to receiving the Wells Notice from the SEC, Crypto.com has done so I filed a lawsuit Against the regulatory body, with the aim of protecting the future of the cryptocurrency industry in the United States. In its statement, Crypto.com stressed the need to take legal action, saying:
We are doing this to protect the future of the US cryptocurrency industry, by joining a series of our peers who are actively defending themselves against a misguided federal agency acting beyond its mandate under the law.
The exchange argues that the SEC is exceeding its jurisdiction and unilaterally expanded its authority to classify nearly all cryptocurrency transactions as securities, except those involving Bitcoin (BTC) and Ethereum (ETH).
They claim that this discrimination lacks a solid legal basis and fails to adhere to required regulatory procedures, including the notice-and-comment rule imposed by the Administrative Procedure Act.
Crypto.com asserts that the SEC’s enforcement actions are “arbitrary and capricious,” especially given that many cryptocurrencies share characteristics and transaction methods similar to those of BTC and ETH. The exchange seeks to stop what it describes as illegal activities carried out by the SEC that exceed its legal authority and violate federal law.
Lobbying for CFTC oversight of cryptocurrency derivatives
In addition to the lawsuit, Crypto.com | CDNA has filed a petition with both the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC).
This petition aims to clarify the regulatory framework governing certain cryptocurrency derivatives products, and calls for a common interpretation that would classify these products as solely subject to the jurisdiction of the CFTC.
The relevant agencies have 120 days to respond, either by issuing a jointly approved explanation or by providing written reasons for any denial.
At the time of writing, the Crypto.com ecosystem token Cronos (CRO) is trading at $0.075, down 5% in the past hour.
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