Crypto.com Sues SEC, Disputes Agency’s Jurisdiction Over Digital Assets

On Tuesday, Crypto.com filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) in Tyler, Texas. The suit also names SEC Chair Gary Gensler and four other commissioners, following a notice of impending legal action from the federal agency.

Crypto.com CEO Kris Marszalek took to X (formerly Twitter) to express the company's opposition, stating, "The SEC’s unauthorized overreach and unlawful rulemaking regarding crypto must stop."

The lawsuit argues that the SEC has expanded its jurisdiction beyond statutory limits, and claims that the agency has incorrectly categorized most crypto trades as securities transactions. This challenge follows a Wells notice from the SEC, accusing Crypto.com of operating as an unregistered broker-dealer and securities clearing agency. Crypto.com denies these allegations, asserting that cryptocurrencies are not securities subject to SEC oversight.

Founded in Hong Kong in 2016, Crypto.com has become one of the leading crypto exchanges, boasting over 80 million users globally. The exchange gained widespread recognition in the U.S. when the Staples Arena in Los Angeles was renamed the Crypto.com Arena in 2021.

Crypto.com’s preemptive lawsuit aims to protect the digital asset industry from what it views as unlawful enforcement actions by the SEC. Earlier this year, the SEC issued similar warnings to other major players in the crypto space, including Robinhood, Coinbase, and NFT marketplace OpenSea, all of whom faced potential SEC actions.

In addition, Crypto.com is seeking clarification from the Commodity Futures Trading Commission (CFTC) to establish that crypto derivatives fall solely under the CFTC's authority, rather than the SEC’s.