Regulation
SEC sued against crypto regulator
Lejilex, a digital assets company, along with the Crypto Freedom Alliance of Texas (CFAT), filed a lawsuit against the United States Securities and Exchange Commission (SEC) in a Texas court, challenging the power of the SEC to regulate digital assets.
The complaint, filed February 21, claims the SEC exceeded its jurisdiction by treating almost all digital asset transactions as investment contracts under federal securities laws.
The lawsuit argues that the SEC did not receive explicit authority from Congress to regulate digital assets and that the agency’s enforcement actions were based on an overly broad interpretation of its powers.
Lejilex, which plans to launch a new digital asset trading platform called Legit.Exchange, fears possible enforcement actions from the SEC based on the regulator’s recent stance. CFAT, which advocates for the development of responsible crypto policy in Texas, says the SEC’s current approach prevents other authorities from properly regulating digital assets.
The complaint, which spans 57 pages, criticizes the SEC for not proposing any regulations subject to public comment that would clarify its regulatory domain on digital assets.
The plaintiffs are seeking a court ruling to confirm that secondary market sales of digital assets facilitated by Legit.Exchange do not constitute sales of securities. They also want the court to declare that Legit.Exchange will not operate as an unregistered securities exchange, broker-dealer or clearing agency.