According to court documents filed on Thursday, 18 U.S. states jointly filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), accusing the SEC of "overstepping its authority" under the leadership of Chairman Gary Gensler and trying to "intervene in states' regulation of digital assets." Supervision".
Suing the SEC for Violations of the (Federal Administrative Procedure Act)
The lawsuit was jointly initiated by 18 Republican state attorneys general and the Decentralized Finance Education Fund (DeFi Education Fund). It has been filed in the Eastern District Court of Kentucky (Kentucky). The defendants include the SEC, Chairman Gary Gensler and 4 other SEC members.
Gary Gensler has asserted in the past that most cryptocurrencies are securities, arguing that cryptocurrency companies must register and comply with SEC regulations. Over the years, the SEC has also launched multiple lawsuits against large cryptocurrency exchanges such as Binance, Coinbase and Kraken.
The lawsuit claims that the SEC's "cryptocurrency policy" is an illegal administrative action that violates the (Federal Administrative Procedure Act), and therefore requests a federal judge to "prohibit the SEC from continuing to take enforcement actions against digital asset platforms."
The SEC’s blanket assertion of regulatory jurisdiction is untenable. The digital assets referred to here are merely assets and are not investment contracts covered by federal securities laws.
The state attorneys general who filed the lawsuit asked the court to declare that "digital asset transactions are not investment contracts" and order to prevent the SEC from continuing to register as a securities exchange, dealer, broker or settlement institution on the basis that "the digital asset platform did not facilitate such secondary transactions" in the future. ” to file charges.
Unilaterally seizing regulatory power from states
The complaint points out that states have established their own regulatory scope for cryptocurrency and encouraged the development of the industry. These state attorneys general and the DeFi Education Fund said: “The SEC failed to respect this distribution of power.” They said:
Instead, the SEC, without congressional authorization, has sought to unilaterally wrest regulatory authority from states through a series of ongoing enforcement actions targeting the digital asset industry on the basis that nearly all purchases and sales of digital assets are “investment contracts.” ”, securities transactions that must comply with the provisions of the Securities Act of 1933 and the Exchange Act of 1934, on the grounds that some buyers of digital assets anticipate that the assets will increase in value due to the efforts of the creators.
The complaint also mentions the "Howey Test," which is the tool used by the U.S. Supreme Court in 1946 to determine "whether an asset should be classified as an investment contract and therefore deemed a security." The SEC frequently invokes the Howey test as precedent in enforcement actions against cryptocurrency businesses.
In the latest lawsuit, the state attorney general disputes this approach and says there is a difference between "continuing obligations" and assets.
The SEC declined to comment.
This case was filed at a time when U.S. President-elect Donald Trump was taking the cryptocurrency market to its peak, and SEC Chairman Gary Gensler under President Joe Biden was about to step down, and Trump is expected to appoint an Someone who supports the cryptocurrency industry to take over as SEC chairman.
An SEC spokesman declined to comment on the case. "While we do not comment on litigation, state-level regulators have been vigorously cooperating to expose and prosecute misconduct in the cryptocurrency market," he said.
"Chairman Gary Gensler also sued! The "18 state attorneys general" in the United States jointly sued the SEC for exceeding its authority." This article was first published on (Block Guest).