Crypto.com, a major cryptocurrency exchange, has taken legal action against the United States Securities and Exchange Commission (SEC) following a Wells notice from the agency. The notice indicates that the SEC may take enforcement action, but Crypto.com views this as unjust and excessive regulation. CEO Kris Marszalek announced the lawsuit, with the company believing that a future US administration might adopt a more constructive approach towards cryptocurrency regulation.
Legal Precedents Offer Hope
Source: Blockchain Association
Crypto.com’s Chief Legal Officer, Nick Lundgren, highlighted recent legal victories against the SEC as critical to their case. One notable win was Grayscale Investments’ successful lawsuit in August 2024, allowing it to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF. Additionally, a July 2023 court ruling determined that XRP is not a security when traded on exchanges. According to Lundgren, these rulings confirm that cryptocurrency itself does not constitute a security, providing Crypto.com with a strong legal foundation.
US Operations Unaffected by Wells Notice
Despite receiving a Wells notice, Crypto.com continues its operations in the US. Legal experts stress that such notices do not immediately halt business activities. Companies have the chance to respond through a Wells Submission, allowing them to contest the charges. Crypto.com maintains that its operations are lawful and will continue while awaiting court decisions.
Crypto.com’s Expanding US Presence
An excerpt from the list of Crypto.com-supported US jurisdictions. Source. Crypto.com
Crypto.com first launched its exchange services in the US in 2022, catering to institutional investors. Though its institutional platform was suspended in June 2023 due to low demand, the exchange has reportedly continued offering services to retail clients. As of now, the company operates in 49 US states, with its headquarters in Texas, though it is still seeking regulatory approval in New York.
With recent success, Crypto.com even surpassed Coinbase in trading volume in August 2024, reaching $3.2 billion in daily trades. The platform’s growth is attributed to favourable market conditions and new institutional clients.
