US Authorities Accuse SEC of Overreaching in Crypto Crackdown

Attorneys general from 18 US states and the DEF have filed a lawsuit against the SEC and its five commissioners, accusing them of unconstitutional overreach and unfair persecution of the crypto industry. The case has been filed in the District Court for the Eastern District of Kentucky.

?SCOOP: 18 U.S. states have filed to sue the @SECGov and its commissioners, accusing them of unconstitutional overreach and unfair persecution of the #crypto industry under the leadership of agency chief @GaryGensler.

The lawsuit, signed by 18 Republican Attorneys General,… pic.twitter.com/wxOovuIRQH

— Eleanor Terrett (@EleanorTerrett) November 14, 2024

The document details how the regulator’s enforcement actions against Bitcoin exchanges have infringed upon states’ rights to independently regulate their economies.

The plaintiffs are seeking a court order to prohibit the Commission from filing further lawsuits against the industry.

“The SEC’s broad assertion of regulatory jurisdiction is untenable. The digital assets in question are merely assets, not investment contracts subject to federal securities laws,” the document states.

The lawsuit also references the Major Questions Doctrine—a legal principle established by the Supreme Court, which holds that agencies should not expand their regulatory powers without clear congressional authorization.

DEF CEO Miller Whitehouse-Levine stated that the lawsuit targets the SEC’s “overreach.”

“DeFi and cryptocurrencies in general promise to make financial services and the digital economy more accessible, efficient, interoperable, reliable, and consumer-oriented. The SEC is currently an obstacle to realizing this promise,” he noted.

Kentucky Attorney General Russell Coleman described the lawsuit as an attempt to “prevent the federal government from reaching into the wallets of state residents.”

“Kentuckians of all ages and backgrounds are eager to access cryptocurrency to assert their financial freedom and protect themselves from historic inflation. Instead of encouraging this new dynamic digital industry, the Biden-Harris administration is unlawfully stifling it,” Coleman remarked.

An SEC spokesperson declined to comment on the litigation.

“State securities regulators have been reliable partners in efforts to uncover and halt misconduct in the crypto market,” he added.

In October, SEC Commissioner Mark Uyeda described the regulator’s approach to digital assets as “a disaster for the entire industry.”

Previously, ARK Invest founder and CEO Cathie Wood supported easing the regulator’s stance and predicted an influx of investments in cryptocurrencies and new technologies following a change in its leadership.