A Texas-based crypto company, Lejilex, along with the Crypto Freedom Alliance of Texas (CFAT), has filed a lawsuit against the US Securities and Exchange Commission (SEC), alleging ‘regulatory overreach’ and seeking ‘clarity on the classification of digital assets.’
The lawsuit, filed in a federal court in Fort Worth, contends that the SEC’s “jurisdiction over the cryptocurrency industry lacks a “clear statutory mandate,” prompting concerns about excessive regulation and its impact on innovation within the sector.
Lejilex And CFAT Challenge SEC’s Oversight
Lejilex, which aims to operate Legit.Exchange, a crypto platform, according to Reuters, asserts that the SEC’s assertion of jurisdiction has created uncertainty for the company to list digital assets, including those previously classified as securities by the SEC in legal actions against prominent exchanges such as Binance and Coinbase.
The company seeks legal clarification to ensure that “listing pre-existing tokens” does not “violate securities laws,” highlighting the challenges crypto startups face in navigating regulatory compliance.
CFAT, a lobbying group representing industry interests, has joined the lawsuit, citing difficulties in advocating for “sensible policies” in Texas due to the SEC’s broad oversight of digital assets.
The group, which includes prominent members such as Coinbase and Andreessen Horowitz’s a16z crypto fund, aims to block potential SEC enforcement actions against its members and advocate for a more “conducive regulatory environment” for the cryptocurrency industry.
Lejilex and CFAT contend that the SEC’s characterization of digital assets as “investment contracts” overlooks the absence of a continuous commitment between creators and buyers.
They are pursuing legal action to contest the SEC’s regulatory approach and advocate for the application of the “major questions doctrine,” which enables judges to nullify agency actions that have substantial “economic and political implications” without explicit authorization from Congress.
Crypto Community Voices Concerns Over SEC Leadership
Lejilex and CFAT’s negative comments regarding the US SEC are not the first. Seasoned trader Peter Brandt, renowned for his market insights, has recently publicly criticized SEC Chairman Gensler, citing Gensler’s track record of neglecting investor interests.
Gensler has a long history of NOT looking out for the interests of investors. Gensler was instrumental in the bankruptcy of MF Global by allowing his old Goldman Sachs buddy slimy Jon Corzine to co-mingle customer money with MF Global’s own money to meet its margin call on a bad… https://t.co/ZOfntN98Xi
— Peter Brandt (@PeterLBrandt) February 15, 2024
Stuart Alderoty, Ripple’s Chief Legal Officer (CLO), has also recently condemned the SEC’s approach under Gensler’s leadership, alleging misuse of authority by Gensler and Enforcement Director Gurbir Grewal.
Please read this thread from Coinbase’s Chief Legal Oficer. Under Gensler and its Enforcement Director Gurbir Grewal (no relation) the SEC behaves as if it operates in a police state exempt from the consequences of its actions. Enough is indeed enough. https://t.co/BnVh8pGT7j
— Stuart Alderoty (@s_alderoty) February 13, 2024
Featured image from Unsplash, Chart from TradingView