Texas Crypto Firm Sues SEC Over Digital Asset Regulation

Lejilex and CFAT Challenge SEC’s Oversight

A Texas-based crypto company, Lejilex, and the Crypto Freedom Alliance of Texas (CFAT), have filed a lawsuit against the US Securities and Exchange Commission (SEC). They allege that the SEC is overreaching its regulatory authority and seeking clarity on how digital assets should be classified.

Lejilex, which operates the crypto platform Legit.Exchange, says that the SEC’s assertion of jurisdiction has made it uncertain for the company to list digital assets. This includes those that the SEC has previously classified as securities in legal actions against prominent exchanges like Binance and Coinbase.

The company is seeking legal clarification to ensure that listing pre-existing tokens does not violate securities laws. This highlights the challenges that crypto startups face in complying with regulations.

CFAT, a lobbying group representing industry interests, has joined the lawsuit. They argue that the SEC’s broad oversight of digital assets has made it difficult to advocate for sensible policies in Texas.

The group, which includes prominent members such as Coinbase and Andreessen Horowitz’s a16z crypto fund, aims to block potential SEC enforcement actions against its members. They also want to advocate for a more conducive regulatory environment for the cryptocurrency industry.

Lejilex and CFAT’s Arguments

Lejilex and CFAT argue that the SEC’s characterization of digital assets as investment contracts overlooks the absence of a continuous commitment between creators and buyers. They are pursuing legal action to contest the SEC’s regulatory approach and advocate for the application of the major questions doctrine.

This doctrine enables judges to nullify agency actions that have substantial economic and political implications without explicit authorization from Congress.

Crypto Community Voices Concerns Over SEC Leadership

Lejilex and CFAT’s negative comments regarding the US SEC are not the first. Seasoned trader Peter Brandt and Ripple’s Chief Legal Officer Stuart Alderoty have also criticized the SEC’s approach under Gensler’s leadership.

They allege that Gensler and Enforcement Director Gurbir Grewal have misused their authority.