Crypto.com has expressed confidence in its legal standing following the filing of a lawsuit against the U.S. Securities and Exchange Commission (SEC). The exchange’s chief legal officer, Nick Lundgren, cited several recent legal victories against the SEC as setting favorable precedents for their case.
The conflict arose after Crypto.com received a Wells notice from the SEC in early October, which typically signals the regulator’s intention to file charges for securities violations. The exchange views this move as another example of the SEC’s overreach, a stance they are challenging in court.
Legal Rulings that Strengthen Crypto.com’s Case
In recent years, several cryptocurrency companies have successfully fought back against SEC enforcement actions. Grayscale’s win over the SEC in August 2024 allowed them to convert their Grayscale Bitcoin Trust into a spot Bitcoin ETF, and Ripple's legal battle in July 2023 led to XRP not being classified as a security when sold on digital asset exchanges.
“These rulings confirm that crypto is not inherently a security, and they put us on solid legal footing,” Lundgren said. He added that Crypto.com expects to prevail based on the precedent set by these rulings, and he believes the U.S. judicial system will ultimately provide the regulatory clarity that the SEC has failed to deliver.
The Wells Notice and Its Impact
A Wells notice is a formal notice from the SEC that it is considering bringing charges, but it doesn’t stop a company from continuing operations. In this case, Crypto.com has decided to continue its business activities in the U.S. as they prepare to respond to the Wells notice with their legal arguments.
Crypto.com’s Presence in the U.S.
Despite regulatory challenges, Crypto.com has a robust presence in the U.S., currently offering services in 49 states and maintaining a local headquarters in Texas. However, the company temporarily halted its institutional platform in June 2023, citing limited demand, while continuing to offer services to retail clients.
With Crypto.com surpassing Coinbase in trading volume in August 2024, reaching $3.2 billion in daily trades, the exchange remains a major player in the crypto market despite the regulatory hurdles.
