Eighteen states, led by Kentucky Attorney General Russell Coleman, filed a lawsuit against the Securities and Exchange Commission (SEC) and its five commissioners, accusing the agency of unconstitutional overreach in its enforcement against the cryptocurrency industry. The lawsuit, filed in Kentucky with support from the DeFi Education Fund, includes Arkansas Attorney General Tim Griffin and 16 other Republican state attorneys general from Nebraska, Tennessee, West Virginia, Texas, Mississippi, Montana, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, Oklahoma, Florida, and Iowa.
The suit challenges SEC Chair Gary Gensler’s assertion that most cryptocurrencies, aside from Bitcoin and Ether, are securities under the SEC’s jurisdiction. The AGs argue this broad interpretation of securities law exceeds the agency’s authority and violates federalism principles, infringing on states’ rights to regulate their economies. They also claim the SEC’s actions have introduced significant risks to the growing digital asset sector and displaced state laws designed to protect consumers.
The SEC, under Gensler, has pursued high-profile enforcement actions against crypto firms like Coinbase, Ripple, and Kraken. However, critics, including the 18 AGs and many in Congress, argue that the lack of clear federal rules leaves the industry in “regulatory limbo.”
Gensler defended the SEC’s enforcement approach, stating courts have upheld the agency’s authority. Nevertheless, the lawsuit emphasizes the SEC’s actions have harmed innovation and deprived states of their regulatory roles. Kentucky AG Coleman remarked, “We’re filing this challenge to cut the bureaucracy down to size.”
The case comes amidst political shifts favoring the cryptocurrency industry, with President-elect Donald Trump pledging to support the sector and reverse what he termed a “war on crypto.” The outcome of the lawsuit and potential changes in SEC leadership remain uncertain.
For more details, read the full article from Eleanor Terrett here: https://www.foxbusiness.com/politics/18-states-sue-sec-over-unconstitutional-overreach-digital-assets
