Crypto.com files suit against SEC, discloses Wells notice

Crypto.com said it filed a suit against the Securities and Exchange Commission after it received a Wells notice earlier this year.

The crypto firm said it’s trying to “protect the future of the crypto industry in the US, joining a series of our peers who are actively defending themselves and taking action against a misguided federal agency acting beyond its authorization under the law.”

A slew of other crypto firms have also received similar notices, including Uniswap, Consensys and Robinhood.

“Our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the SEC has established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold, whereas identical transactions in bitcoin (BTC) and ether (ETH) are somehow not,” a press release announcing the suit said.

The suit — similar to the one Consensys filed earlier this year — was filed in a Texas court. It names SEC Chair Gary Gensler and Commissioners Caroline Crenshaw, Jamie Lizarraga, Hester Peirce and Mark Uyeda, as well as the agency itself.

Per the suit, the SEC’s Wells notice is focused on Crypto.com allegedly acting as an “unregistered broker-dealer and securities clearing agency under the federal securities laws.”

A Wells notice warns firms of potential enforcement actions, though it doesn’t always mean that the SEC will file its own suit against the firm. Crypto.com said it received the notice on Aug. 22.

“The SEC has refused to provide Crypto.com a complete list of network tokens sold on the platform that it plans to allege are crypto asset securities. Instead, it has referred Crypto.com to other enforcement actions in which the SEC has asserted claims based on secondary-market sales of various network tokens, including the Targeted Network Tokens,” the suit claims.

“The SEC does not comment on the existence or nonexistence of a possible investigation,” a spokesperson told Blockworks.

Updated October 8, 2024 at 1:24 pm ET: Added statement from the SEC.
Updated October 8, 2024 at 10:11 am ET: Modified language for clarity.

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