Lejilex challenges SEC’s jurisdiction over digital assets
Lejilex, a Texas crypto business, is disputing the SEC’s claim to jurisdiction over digital currencies in a court case.
The lawsuit, which was filed in the U.S. District Court of Fort Worth, argues that the SEC lacks a clear statutory mandate to assert control over digital asset trading platforms like Legit. Exchange, which Lejilex plans to launch.
A significant asset given the heightened regulatory scrutiny of the crypto industry in recent years.
Joel Cohen
The plaintiffs claim that the SEC’s classification of digital assets as securities and its subsequent enforcement actions are overly broad and place significant operational hurdles on the crypto industry.
Lejilex argues that digital asset transactions do not fit the definition of “investment contracts,” a key component in the SEC’s securities laws, and should not be subject to the same regulations.
The lawsuit also cites the major questions doctrine, which holds that significant regulatory changes must have clear congressional authorization before implementation.
So this is huge. Today, @LEJILEX and the Crypto Freedom Alliance of Texas (CFAT) sued the SEC seeking a declaration that “secondary-market sales of digital assets like the ones that LEJILEX intends to facilitate through the https://t.co/FrN5OiTwYN are not sales of securities.”…
— Amanda Tuminelli (@amandatums) February 21, 2024
Lejilex has entered into a partnership with the Crypto Freedom Alliance of Texas (CFAT) to contest an issue in court.
Rather than focusing on launching our enterprise, we find ourselves having to pursue legal action
Mike Wawszczak
The result of this legal action may shape the future regulatory structure for digital currencies within the U.S., possibly bringing about more defined rules or an expansion of SEC authority.
This legal matter is under the supervision of Judge Reed O’Connor at the District Court of Fort Worth in the United States.
Please read this thread from Coinbase's Chief Legal Oficer. Under Gensler and its Enforcement Director Gurbir Grewal (no relation) the SEC behaves as if it operates in a police state exempt from the consequences of its actions. Enough is indeed enough. https://t.co/BnVh8pGT7j
— Stuart Alderoty (@s_alderoty) February 13, 2024
The lawsuit brings up potential conflicts of interest within the SEC regarding enforcement actions against crypto exchanges Binance and Coinbase.
The lawsuit follows recent regulatory challenges from other players in the digital asset space, including Ripple Labs and Terraform Labs, which have also questioned the SEC’s jurisdiction and enforcement actions. Attorneys from the international law firm Jenner & Block LLP represent Lejilex and CFAT.
This legal challenge underscores the ongoing debate surrounding the role of regulators in the rapidly evolving world of cryptocurrencies and blockchain technology.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
