Coinspeaker Lejilex Seeks Legal Protection against SEC Overreach in Crypto Regulation
Texas-based crypto company Lejilex has filed for a preemptive ruling that would shield it from potential Securities and Exchange Commission (SEC) enforcement action before launching its crypto exchange.
In a brief submitted to a Texas federal court on October 3rd, Lejilex accused the SEC of overstepping its regulatory authority. The startup argued that it plans to facilitate crypto transactions, not sell securities. It claimed that the SEC is expanding its regulatory authority over digital assets, beyond what is necessary.
Lejilex, part of the Crypto Freedom Alliance of Texas, seeks court clarification for its planned crypto exchange to ensure that its business activities won’t violate securities laws. The company wants to protect itself so it won’t face legal issues related to securities regulations once it starts operating the crypto exchange.
Lejilex criticizes the financial watchdog, stating that the SEC is trying to categorize a wide range of asset sales as security transactions while at the same time pushing hard to expand its power over these transactions without any limits.
The SEC, however, has pushed back the claims; they argued that Lejilex’s lawsuit is an attempt to block the regulation by trying to get the courts to decide that cryptocurrencies are not securities. The agency also challenged Lejilex’s legal standing, arguing that the startup has not faced any SEC enforcement action.
Early this year, Lejilex, along with the Crypto Freedom Alliance of Texas (CFAT), filed a lawsuit against the SEC for overstepping its jurisdiction. The company also formally requested the court ruling that it would not be breaking any securities laws by listing pre-existing tokens.
Industry Reactions and Calls for Regulatory Clarity
The legal battle has drawn commentary from the crypto industry. Coinbase’s chief legal officer, Paul Grewal, criticized the SEC’s apparent contradictory arguments, noting that the agency had previously taken the opposite position in a case against Coinbase. He further commented that the agency has not been consistent in its decisions as it presents contradictory information in different legal cases. He said:
“This is our government acting in the name of all of us. Telling one judge one thing while telling another the opposite should not be tolerated. We deserve better.”
Responding to Paul’s comment, Lejilex revealed that the SEC’s inconsistency has been the major obstacle preventing them from bringing their product to the market. The delay has forced them to run a silent operation while they await regulatory clarity.
The ongoing legal battle between Lejilex and the SEC further shows how regulation clarity keeps affecting the growth of cryptocurrency. This week, the agency also filed an appeal to a 2023 court ruling that decided that XRP is not a security when sold to retail investors on exchanges. The commission’s decision to appeal has not gone down well with the majority within the crypto industry, who further demand more clarity on crypto rules.
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Lejilex Seeks Legal Protection against SEC Overreach in Crypto Regulation