Crypto.com Files Lawsuit Against SEC Over Cryptocurrency Classification as Securities
Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) for classifying cryptocurrencies as securities. The lawsuit highlights the ongoing debate over the regulatory position of digital assets in the U.S. Under U.S. law, a cryptocurrency is considered a security if it qualifies as an investment contract, wherein investors expect profits based on the efforts of others. The SEC has been working to apply these regulations to cryptocurrencies, aiming to ensure that they meet existing standards.
The SEC began investigating Crypto.com in February 2023, issuing a notice of enforcement action in August 2024. Crypto.com argues that the SEC has overstepped its authority by attempting to categorize nearly all trades on its platform as securities transactions, regardless of the method of its sale. The firm asserts that applying the securities laws to digital assets is a misinterpretation of those regulations.
If the court were to approve the SEC’s classification, the consequences could create a massive ripple across the cryptocurrency market, increasing compliance requirements for exchanges and potentially limiting user access to certain digital assets. The legal action comes at a pivotal time for Crypto.com, which has experienced rapid growth and increased its BTC trading volume to nearly 30%. The Court’s decision would strongly influence the market structure of the firm and its future developments.
