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US States Sue SEC for Aggressive Approach Against Cryptocurrencies
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A coalition made up of attorneys general from 18 states in the United States sued the US Securities and Exchange Commission (SEC) and its five commissioners. The group alleges that the agency has exceeded its authority in the cryptocurrency sector.
The coalition filed the lawsuit on November 14 under the leadership of Russell Coleman, Kentucky’s attorney general, with support from states including Texas, Ohio, Florida, and Utah.
In addition to the states, the DeFi Education Fund, a non-profit organization focused on defending web3 technology, also participates as a plaintiff. The suit argues that the SEC has expanded its jurisdiction without congressional approval. In this way, the regulator would be using a regulatory approach through lawsuits.
According to the coalition, the SEC has hindered innovation and economic growth by targeting large cryptocurrency companies such as Coinbase, Ripple and Kraken. The group highlighted that the use of the Howey Test, a legal framework from 1946, to classify digital assets as securities is an outdated practice and inappropriate for the current market.
Allegations and criticisms of the SEC’s actions
Furthermore, prosecutors also mentioned the Ripple case, in which a court ruled in July 2023 that the XRP token is not, by nature, a security. The decision has been a precedent in other court cases.
The Blockchain Association points out that cryptocurrency companies have already spent US$429 million on litigation since 2021 due to a lack of regulatory clarity.
Since assuming the SEC chairmanship in 2021, Gary Gensler has driven a more rigorous agenda. Under his leadership, the SEC took action against several companies in the sector, such as Uniswap Labs, OpenSea and Consensys, in addition to fining Kraken US$30 million for its staking services.
Despite the criticism, Gensler defended the agency’s actions at an event the same day he received the lawsuit. According to him, “courts have consistently supported our measures to protect investors.”
However, changes may be on the way. During his campaign, President-elect Donald Trump promised to fire Gensler as soon as he takes office. Additionally, Trumop should nominate more cryptocurrency sector-friendly leaders for positions.
US States Sue SEC for Aggressive Approach Against Cryptocurrencies
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US States Sue SEC for Aggressive Approach Against Cryptocurrencies
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US States Sue SEC for Aggressive Approach Against Cryptocurrencies
