Regulation
Crypto.com sues the US SEC after Wells notice
- com has sued the SEC for overreaching its regulatory authority over crypto.
- The lawsuit challenges SEC rules categorizing most crypto transactions as securities.
- com seeks clarity on crypto derivatives through a petition with the CFTC.
Crypto.com has today filed a lawsuit against the US Securities and Exchange Commission (SEC) in response to a Wells notice received from the agency.
According to a communication from the exchange, the lawsuit aims to challenge what Crypto.com describes as the SEC’s overreach and misguided regulatory actions that threaten the future of the crypto sector in the United States.
The complaint asserts that the SEC has improperly expanded its jurisdiction, claiming that virtually all cryptocurrency transactions qualify as securities, except for those involving Bitcoin (BTC) and Ethereum (ETH).
This claim is based on the assertion that the SEC has established an unlawful rule without the necessary notice and comment period mandated by the Administrative Procedure Act.
According to Crypto.com, this arbitrary enforcement contradicts the fundamental principles of fair regulatory practices, particularly given that the characteristics and sales methods of various crypto assets are often indistinguishable from those of BTC and ETH.
Crypto.com emphasizes that it has always prioritized compliance and security, operating as a registered money services business with the Financial Crimes Enforcement Network (FinCEN) and holding over 40 state money transmitter licenses. The company views this lawsuit as a necessary step to halt the SEC’s actions, which they argue exceed its legal authority and violate federal law.
In addition to the lawsuit, Crypto.com’s subsidiary, Crypto.com | Derivatives North America, has filed a petition with the Commodity Futures Trading Commission (CFTC) and SEC. This petition seeks a joint interpretation confirming that certain cryptocurrency derivative products fall solely under the CFTC’s jurisdiction, further demonstrating Crypto.com’s commitment to clarifying regulatory frameworks for the industry.
As Crypto.com navigates this unprecedented legal challenge, the company remains steadfast in its operations, asserting that its commitment to regulatory compliance will ultimately benefit its customers and the broader crypto ecosystem.
This lawsuit not only underscores the growing tension between cryptocurrency businesses and regulatory agencies but also highlights the urgent need for clearer regulations in the rapidly evolving digital economy.
The U.S. Attorney’s Office in Manhattan plans to reduce its focus on cryptocurrency-related crimes. This decision follows a series of major legal victories, according to Scott Hartman, co-chief of the securities and commodities task force at the Southern District of New York (SDNY). These include the high-profile conviction of Sam Bankman-Fried, founder of FTX.
Manhattan US Attorney to Focus Less on Crypto Fraud Amid Leadership Shift
The Manhattan US Attorney’s Office will now slow down on enforcing cases of cryptocurrency scams after it had increased its activity in the previous year. Scott Hartman made this admission during a conference held in New York stating that fewer prosecutors will now be focusing on these kinds of crimes.
He mentioned that the office had dealt with many of the severe fraud issues arising from the market volatility during the 2022 cryptocurrency winter.
Moreover, Hartman clarified that the reduced focus reflects the office’s strategic realignment. This shift comes as other regulatory agencies, such as the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), maintain their active roles in monitoring crypto regulations.
Ex-SEC Chair Jay Clayton To Lead Manhattan Attorney’s Office
The cuts in resources for crypto cases occur when there is likely to be a change in leadership at the Manhattan US Attorney’s Office. The new front-runner for the position of U.S. Attorney once Trump gets into office is former SEC Chair, Jay Clayton.
Clayton, who was director of the SEC from 2017 to 2021, took a less confrontational stance than current SEC Chair Gary Gensler did. Notably, the crypto community witnessed a heated debate over the SEC leadership criticizing the current administration approach. As such, several crypto enthusiasts including ex-SEC official John Reed Stark demanded that Gary Gensler resign.
The appointment of Clayton suggests a potential recalibration of priorities within the Manhattan US Attorney’s Office. As the office changes its leadership it is expected that it will shift its attention to other general issues concerning securities and commodities.
Even more so, the Manhattan US Attorney’s Office has hit success in several cases involving the crypto business, among them that of SBF, the former head of FTX. All these legal achievements have defined a significant stage in the fight against crypto fraud.
Hartman noted that the successful handling of major cases allowed the office to adjust its allocation of resources. Moving forward, fewer prosecutors will be tasked with investigating cryptocurrency crimes as the office prioritizes other enforcement.
Despite reducing its focus, the Manhattan US Attorney’s Office emphasized ongoing collaboration with agencies like the SEC and CFTC. Hartman acknowledged that these regulatory bodies ensure continued oversight and enforcement against unlawful activities. This cooperative approach aims to maintain accountability while enabling the office to concentrate on a wider range of legal priorities.
Ronny Mugendi
Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
A Dogecoin lawsuit against Elon Musk has come to a close after investors decided to withdraw their appeal. The case, which accused Musk of fraud and insider trading related to the cryptocurrency, had been dismissed earlier this year.
The withdrawal also includes a request to drop related sanctions against Musk’s lawyers, marking the end of a high-profile legal battle in federal court.
Dogecoin Lawsuit Against Elon Musk and Tesla Ends
The Dogecoin lawsuit, originally filed by Dogecoin investors, alleged that Musk and his electric car company Tesla engaged in fraudulent activities to manipulate Dogecoin’s price. Investors claimed Musk’s tweets, public appearances, and statements—including on NBC’s “Saturday Night Live”—were used to profit at their expense.
The investors initially sought $258 billion in damages, amending their complaint four times over two years. However, on August 29, U.S. District Judge Alvin Hellerstein dismissed the case, stating that reasonable investors could not establish securities fraud based on Musk’s public statements. The judge noted that Musk’s comments, such as describing Dogecoin as the “future currency of Earth,” could not be reasonably interpreted as market manipulation or insider trading.
Subsequently, this week, the investors have formally withdrew their appeal and their motion to sanction Musk’s legal team for alleged misconduct. Similarly, Musk and Tesla dropped their motion to sanction the investors’ lawyer for what they called a “frivolous” and ever-changing lawsuit. Both parties as a result filed a stipulation to dismiss the case in Manhattan federal court on Thursday night, pending final approval by Judge Hellerstein.
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Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Amid the ongoing race to replace Gary Gensler as the Chairman of the US Securities and Exchange Commission (SEC), Chris Giancarlo has dispelled rumors that he’s under consideration for the job. Known as “Crypto Dad,” Chris Giancarlo’s name popped up as one of the high-profile regulators capable of replacing the US SEC chair.
US SEC Chair and the Chris Giancarlo Clarification
Besides the general change in leadership that comes with a new administration, Donald Trump plans to fire Gary Gensler right from his first day in office. With Trump’s victory over Kamala Harris, it becomes evident that Gensler is in his last days in office.
Commenting on the trend and his prospect for the role, Chris Giancarlo said he once cleaned up Gensler’s mess at the Commodity Futures Trading Commission (CFTC) and has no plans to do it again. It is worth noting that before taking up the US SEC Chair position, Gensler served as the CFTC Chairman from May 26, 2009, to January 3, 2014.
Chris Giancarlo took over from him as CFTC Commissioner on June 16, 2014, for a term expiring on April 13, 2019. He bagged President Donald Trump’s nomination for a full-time role on August 3, 2017. Having served in the same capacity as Gensler, the Crypto Dad said the DC rumors are wrong.
As for reports that I’m in mix to run @SECGov, I’ve made clear that I’ve already cleaned up earlier Gary Gensler mess @CFTC and don’t want to have do it again. DC rumors that I’m interested in some #crypto role @USTreasury are also wrong.
— Chris Giancarlo (@giancarloMKTS) November 14, 2024
Beyond the US SEC tag, Giancarlo has also debunked claims that he’s in line for the US Treasury Secretary role.
Who Will Replace Gary Gensler?
Many named Chris Giancarlo a good fit for the SEC chairman role because of his advocacy work in the industry. As reported earlier by Coingape, even pro-XRP lawyer turned-politician John Deaton once endorsed Giancarlo for the Chairmanship role.
As Chris Giancarlo dispelled the rumors, John Deaton noted that the callout shows the damage Gensler did to both the SEC and CFTC.
With Crypto Dad ruling himself out, the top picks now include current SEC Commissioners Mark Uyeda, Hester Peirce, and Robinhood CLO Dan Gallagher, who are the leading candidates for the role. While President Trump may choose a completely new name, what the industry places a premium on is someone with a pro-crypto mindset.
Godfrey Benjamin
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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