In a decisive move, cryptocurrency exchange Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) following the agency’s issuance of a Wells Notice, according to the legal filing.
The complaint seeks declaratory and injunctive relief to prevent what the company describes as an unlawful expansion of the SEC’s jurisdiction—led by its chair, Gary Gensler, to include secondary market sales of cryptographically secured digital assets. A Wells Notice signals the SEC’s intent to pursue formal enforcement action against a regulated party.
Rather than waiting for any formal action, Crypto.com is challenging what it considers a significant overreach by the SEC. In an official statement, the company explained: “We are doing this to protect the future of the crypto industry in the U.S., joining peers who are defending themselves and taking action against a misguided federal agency acting beyond its authority under the law.”
In addition to its lawsuit, Crypto.com’s affiliate, Crypto.com | Derivatives North America (CDNA), has filed a petition with both the Commodity Futures Trading Commission (CFTC) and the SEC. The petition seeks clarification on whether certain cryptocurrency derivative products fall under the sole jurisdiction of the CFTC. Crypto.com explained that this action is part of a broader effort to bring regulatory certainty to the industry by encouraging joint rulemaking between the two agencies.
The declaratory lawsuit against the SEC is not an isolated event. Crypto.com joins other companies, such as ConsenSys, a leading Ethereum software and technology incubator company, in challenging the SEC’s authority. Recent developments have amplified concerns about the regulator’s conduct. In March, a federal judge ruled that the SEC had engaged in “gross abuse of the power entrusted to it by Congress” during its dispute with blockchain firm Digital Licensing (operating as DEBT Box). In that case, the judge criticized the SEC for acting in “bad faith” and “deliberately perpetuating falsehoods” in its efforts to secure an asset freeze against the company.
ConsenSys’s Legal Battle With The SEC
ConsenSys has also been involved in a legal challenge against the SEC. The company filed a lawsuit after being added to the SEC’s list of crypto investigation targets. However, the case was dismissed by a Texas court after the SEC closed its Ethereum probe earlier in the year. The court ruled that, with no immediate threat from the SEC, the lawsuit was unwarranted. Despite this, ConsenSys’ lawsuit underscores the ongoing tension between the SEC and the crypto industry over regulatory overreach.
ConsenSys has been pushing for a balanced regulatory framework to support blockchain growth and ensure U.S. leadership in Web3 innovation. Joe Lubin, co-founder of Ethereum and CEO of ConsenSys, emphasized the importance of regulatory clarity, warning that the SEC’s “reckless approach” threatens the future of Ethereum and U.S. competitiveness in emerging technologies.
Lubin also emphasized the importance of regulatory clarity for the future of Ethereum and U.S. technological leadership: “Ethereum is a world-changing technology, and ether itself has the potential to be a significant driver of the U.S. economy of the future. Unlawful SEC regulation, however, threatens to jeopardize this potential and impedes the U.S.’s ability to use blockchain technology as the basis for countless new innovations and technologies—even as other nations race ahead.”
