Recently, you most likely saw that the cryptocurrency exchange Crypto.com took legal action against the SEC. Possibly you carried on with your day, or continue reading to see that the business is “look for[ing] declaratory and injunctive relief to avoid the Securities and Exchange Commission (‘SEC’) from unlawfully broadening its jurisdiction to cover secondary-market sales of specific network tokens.”
If you’re like me, you most likely didn’t process this as huge news. Cryptocurrency tasks are taking legal action against or being taken legal action against by the SEC all the time, and none of these have actually moved the needle. Crypto.com CEO Kris Marszalek stated it submitted the grievance to “safeguard the future of crypto” and, with all due regard, that sort of grand rhetoric made me believe this case was simply a posturing workout.
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When I dug a bit, however, this Crypto.com started to look various. When I operated in Big Law, I focused on what some individuals call “wager the business” lawsuits, and what Crypto.com set in movement in Texas recently may be simply that.
Aaron Brogan is a handling lawyer at Brogan Law PLLC.
Crypto.com’s problem exposed it got a Wells notification from the SEC on Aug. 22. A Wells notification is a letter from the SEC informing you you’re about to be taken legal action against. After you get one you provide proof that you remain in compliance and ask the regulator not to bring the case, however most likely than not, one day quickly, you’re getting summoned to court.
The SEC obviously implicated Crypto.com of “running as an unregistered broker-dealer and securities cleaning firm” based upon its company of assisting in secondary market sell cryptocurrency tokens. This is since the SEC thinks those tokens come from a classification of property it categorizes as “crypto possession securities,” over which it asserts authority.
Crypto.com might have simply waited, however rather it did something about it. The method it did so recommends to me the business thinks this case is existential.
Of all, the company employed Noel Francisco, a previous U.S. Solicitor General, to represent it. Previous Solicitor Generals like Francisco and Uniswap’s counsel Don Verrilli represented the United States federal government in the Supreme Court. They are amongst the absolute best and most knowledgeable appellate litigators in the nation, and, one can securely think, amongst the most costly. You do not work with Noel Francisco to posture. You employ Noel Francisco to go to war.
Possibly serendipitously, Crypto.com had actually just recently developed a North American head office in Tyler, Texas (the Singapore-based company formerly had little satellite workplaces in Miami and Chicago).
