Crypto.com has filed a lawsuit against the SEC after receiving a Wells Notice from the U.S. regulator. The notice, dated August 22, is a preliminary alert indicating that the SEC is considering enforcement actions against the crypto exchange.

CEO Kris Marszalek stated that the lawsuit aims to curtail the SEC's "unauthorized overreach and unlawful rulemaking" to protect the future of cryptocurrency in the U.S.

The Wells Notice signifies that the SEC is contemplating bringing charges against Crypto.com, asserting that the exchange operates as an unregistered broker-dealer and securities clearing agency under federal laws. Marszalek described the lawsuit as a necessary reaction to the SEC's enforcement-based regulation approach, claiming it has negatively impacted over 50 million American crypto holders.

In its court filing, Crypto.com seeks to prevent the SEC from unlawfully extending its jurisdiction over secondary market sales of network tokens available on its platform. The lawsuit is prompted by what Crypto.com refers to as systemic regulation affecting the industry, particularly aimed at limiting the trading of various cryptocurrencies.

"This case is crucial not just for us, but for the entire crypto sector in the U.S., as the SEC’s regulatory actions could set a harmful precedent for the future of digital currencies," said Marszalek.

Additionally, Crypto.com has requested confirmations from the SEC and the Commodity Futures Trading Commission (CFTC) regarding the regulation of certain cryptocurrency derivative products. This action reflects ongoing disputes within the industry about regulatory clarity and compliance.

Crypto.com's native token, CRO, saw its value drop by 4.7% following the announcement of the lawsuit.