Crypto.com Sues SEC, Claims Agency Overstepped Jurisdiction in Classifying Cryptos as Securities

In its lawsuit, Crypto(.)com argues that the SEC has overextended its legal authority by classifying most cryptocurrencies as securities without proper rulemaking or congressional approval.

Crypto(.)com filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) on Monday, alleging that the SEC is overstepping its jurisdiction and enforcing regulations without proper authorization.

The lawsuit, filed in the U.S. District Court for the Southern District of Florida, stems from the SEC's classification of most cryptocurrencies as securities. According to Crypto(.)com, this approach is harming the crypto sector in the U.S. by creating uncertainty for businesses.

"We are doing this to protect the future of the crypto industry in the U.S.," the company said in a statement, adding that it is joining other crypto firms in fighting back against what they perceive as the SEC's regulatory overreach.

The suit claims that the SEC invented a new category, "Crypto Asset Security," without following the proper rulemaking procedures outlined in the Administrative Procedure Act (APA). Crypto(.)com believes this unauthorized expansion has created confusion and made it difficult for lawful businesses to operate efficiently.

"The SEC has purported to classify most cryptocurrencies as securities without engaging in the notice-and-comment rulemaking required by the APA or obtaining congressional approval," the company said in the suit.

"This approach is legally unsustainable and economically harmful and will ultimately stifle innovation and cede global leadership in digital assets to other jurisdictions with clearer and more efficient regulatory frameworks."

In addition to the lawsuit, Crypto(.)com has filed a joint petition with the Commodity Futures Trading Commission (CFTC) and the SEC. This petition seeks clarification on which agency regulates certain cryptocurrency derivatives.

Specifically, the firm aims to confirm that certain digital products fall solely under the CFTC's jurisdiction, reflecting the company's broader effort to bring regulatory certainty to the industry.

Despite the legal battle, Crypto(.)com maintained its continued focus on compliance. The company is registered as a money services business with the Financial Crimes Enforcement Network (FinCEN) and holds over 40 state money transmitter licenses, along with multiple licenses globally.

"Our compliance and security efforts are at the core of our operations, and we remain committed to working within regulatory frameworks," Crypto(.)com noted.

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