Gary Gensler’s SEC sued in Texas for crypto

In Texas, Gary Gensler’s SEC was sued by a crypto association.

The association is called Crypto Freedom Alliance of Texas (CFAT), and the complaint was filed in collaboration with a company that deals with digital assets, Lejilex.

The official statement from the two complainants reveals that the complaint was filed due to the SEC’s alleged illegal targeting of the digital asset sector.

Crypto news: Texas’ complaint against the SEC by Gary Gensler

Lejilex and CFAT have sued the U.S. Securities and Exchange Commission to challenge their alleged wrongful claim that the agency has regulatory authority over virtually all digital asset transactions in Texas and the United States.

They believe the SEC has usurped near-total jurisdiction over the digital assets industry, even though several SEC commissioners acknowledge that Congress never granted the agency the authority to do so.

The complaint was filed in anticipation of the launch of a new digital asset trading platform by the Texas company Lejilex, which has requested support from the CFAT.

The goal is to have a court certify that digital asset transactions are not considered sales of securities subject to SEC registration requirements.

If Lejilex and CFAT were to win this case against the SEC, it would put an end to the SEC’s fight against cryptocurrencies considered unregistered securities.

The complaint is filed in the U.S. District Court for the Northern District of Texas.

The central question

According to the complainants, the SEC not only lacks the legal authority to regulate the majority of digital asset transactions, but has also demonstrated that it is unprepared to respect the limits that Congress has placed on its jurisdiction. Furthermore, they even argue that it would not have been able to develop and apply common sense and consistent regulations for this emerging sector.

Something vaguely similar had also been contested in the past by Coinbase, which had denounced the SEC for not being able to give them clear information on which regulations had to be respected, and above all on what they should have done concretely to avoid not respecting them.

After what happened to Coinbase, which in turn was denounced by the SEC for allowing the exchange of unregistered securities, it is more than logical that a new crypto exchange, in order to avoid problems, takes precautions by taking the SEC to court to understand whether it is right or not .

Lejilex claims that the SEC’s approach, described as “illegal and unpredictable,” has created an environment in which crypto exchanges are unable to operate without fear of being subject to agency enforcement (and punitive) actions, leaving a Trillion-dollar industry and law-abiding individuals in a state of uncertainty.

The risk is that the SEC could end up unilaterally taking control of this industry without thereby respecting its clear statutory mandate that prevents such a massive expansion of its power.

Furthermore, the SEC believes that virtually all digital assets, or nearly all, qualify as securities under their purview, while exchanges argue that crypto transactions are not unregistered security transactions.

The complainants

Lejilex is a for-profit company based in Texas that has developed a new digital asset trading platform called Legit.Exchange.

It is a non-custodial platform, therefore different from the usual centralized exchanges, which allows users to exchange digital assets. We are actively participating in the growth of the crypto community in Texas through our relationship with the Crypto Freedom Alliance of Texas.

CFAT is a Texas-based non-profit trade association that supports the responsible development of digital asset policies in Texas to foster innovation and economic growth while protecting consumers.

They believe blockchain technology paves the way for the next generation of the internet and that Texas has much to gain from being a leader in digital asset policy.

CFAT has several notable industry members, including Coinbase itself, Ledger, Paradigm, Blockchain Capital, and a16z Crypto.

Lejilex co-founder Mike Wawszczak said:

“We would like to launch our own business instead of filing a lawsuit, but here we are.

The SEC’s enforcement actions against our industry have paralyzed those of us who only want to build legitimate businesses and technologies.

Fear of abusive enforcement should not be something that entrepreneurs are forced to experience.

We hope that our action encourages the SEC to reconsider its regulatory approach, and we invite them to work with us and our industry to ensure that the most important technologies of the future are built here in America, under American laws, in line with American values.”