The SEC Sued by 18 States Over Crypto Overreach

18 US states filed a lawsuit against the Securities and Exchange Commission (SEC) and five commissioners under the leadership of Chair Gary Gensler.

The legal action is led by Kentucky Attorney General Russell Coleman in partnership with attorneys general from Ohio, Texas, Iowa, Mississippi, Florida, Oklahoma, and other states.

Fox Business reports that the attorneys collaborated with the DeFi Education Fund to file the lawsuit, stating that the SEC’s approach to crypto and its industry-wide crackdown violates principles of federalism and is unconstitutional. 

According to the lawsuit, Gary Gensler’s interpretation of crypto, categorizing all assets besides Bitcoin and Ether as securities, is overly broad and lacks clear rules for the market.

Previously, the SEC initiated lawsuits against crypto companies, including Coinbase, Kraken, ConsenSys, and Ripple, for allegedly selling unregistered securities.

On November 14, Gary Gensler defended his actions during a speech at the Practicing Law Institute's 56th Annual Institute on Securities Regulation conference.

According to him, courts have approved the SEC’s actions aimed at protecting investors and rejected arguments that the agency cannot enforce the law.

While it’s unclear how the lawsuit will proceed, the crypto industry expects clearer regulations when President-elect Trump takes office. The SEC is expected to have a new chair, who will most likely be pro-crypto.