According to CoinDesk journalists, Wells' notice was sent to the trading platform back on 22 August. Such documents are preliminary warnings that outline possible SEC charges in a given case. They usually lead to enforcement action, i.e. the start of legal proceedings.

Crypto.com crypto exchange logo at 76ers Stadium

In general, the regulator constantly sends such notifications to representatives of the blockchain industry. For example, in April, the developers of the decentralised exchange Uniswap received the relevant document.

They were predictably accused of distributing unregistered securities, which the SEC for some reason considers almost all cryptocurrencies.

Who sued the SEC

Crypto.com co-founder and CEO Chris Marszalek has already commented on Twitter. Here is his rejoinder, as quoted by Cointelegraph.

This unprecedented move by our company against a federal agency is a justified response to the SEC’s policy of regulation through enforcement, which has harmed more than 50 million U.S. cryptocurrency holders.


As previously noted by lawyer John Deaton, the total damage to the digital asset industry by the SEC could be as high as $15 billion. This was his response to the SEC's apology for previous statements by the regulator's representatives, who referred to cryptocurrencies as unregistered securities.


Crypto.com crypto exchange CEO Chris Marszalek

The lawsuit against the regulator is also backed up by an official statement from the company itself about what’s going on.

We are doing this to protect the future of the crypto industry in the US, joining a number of our colleagues who are actively trying to protect themselves and taking action against a federal agency that is exceeding its authority under the law.

Marszalek also promised that the company will use “all available regulatory tools” to bring certainty to the industry. To achieve clarity in this regard, Crypto.com has petitioned the US Commodity Futures Trading Commission (CFTC) and the SEC to confirm the classification of cryptocurrency-based derivatives.

Citing joint regulation under the Dodd-Frank Act, Crypto.com’s lawyers emphasised that any market participant can ask the CFTC and SEC about the exact classification of investment instruments. They continue.

Under these joint rules, the agencies have 120 days to either issue an approved joint interpretation or deny the interpretation.


Such a move is made for a reason. However, CFTC representatives have previously repeatedly stated that they consider popular cryptocurrencies to be commodities, not securities. This approach is the exact opposite of the SEC's position.


SEC Chairman Gary Gensler

If authorities deny a requested interpretation, they must provide reasons for the denial, the experts said.

The agencies are required to consult with the Board of Governors of the Federal Reserve System and may also conduct joint regulation in cooperation with the Fed.

Now the exchange has decided to be proactive, as the lawsuit against the SEC followed the company’s receipt of Wells’ notice. Apparently, Crypto.com wants to show in this way its own desire to move its activities into the legal field and expose the Commission as the only obstacle to the proper regulation of the industry.

Another statement from Crypto.com management has the following lines.

At this point, the SEC’s wrongful enforcement actions are part of the process of operating a legal and licensed crypto business in the United States. While filing a lawsuit against a federal agency is an unprecedented step for our company, the regulator’s actions against our industry have left us with no other choice.

Front page of Crypto.com exchange’s lawsuit against the SEC

Crypto.com representatives clarified that the lawsuit claims the SEC violated the scope of its jurisdiction. The exchange also claims that the SEC “has established an unlawful rule that deems transactions in almost all crypto assets to be securities transactions regardless of how they are traded.”

Previously, experts agreed with the version that the same SEC Chairman Gary Gensler specifically calls all cryptocurrencies securities. Thus, he wants to add digital assets to the jurisdiction of the regulator, which he manages, in order to get more authority in the market and at the same time – increased funding.

SEC head Gary Gensler

Wells’ notice from the SEC, received by the Crypto.com exchange back in August, shouldn’t have much effect on the company’s operations from a customer perspective. So far, “everything is business as usual” on the platform, and it continues to work steadily and serve user requests.


This case is yet another example of how big of a problem the SEC has become for the cryptocurrency industry. Obviously, the cryptocurrency exchange's countersuit is a necessary action in an effort to improve the coin situation in the US. Although as long as the agency is run by Gary Gensler, this is unlikely to happen.


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