18 US States File Lawsuit Against SEC For "Unconstitutional Persecution" of Crypto

Republican Attorney Generals from 18 US states have filed a joint lawsuit against the Securities and Exchange Commission (SEC), its commissioners, and Chair Gary Gensler for the regulator's handling of crypto.

The lawsuit claims the SEC overstepped its constitutional authority by pursuing aggressive regulatory actions against the crypto industry.

Led by Kentucky, Texas, Florida, and Nebraska, as well as DeFi Education Fund, the coalition demands declaratory and injunctive relief for the “unconstitutional persecution” of the crypto sector.

Other states in the coalition include Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, and Oklahoma.

The lawsuit highlights state efforts like licensing, taxation frameworks, and the creation of “laboratories for experimentation," but claims the SEC’s actions breach the separation of powers by imposing federal mandates without Congressional approval.

Furthermore, the lawsuit slams the SEC for ignoring such state initiatives in its pursuit of imposing a federal regulatory framework for digital assets without proper Congressional authorization. The SEC is also alleged to be centralizing regulatory power by enforcing these rules through multiple legal actions, which the plaintiffs claim undermines the constitutionally mandated separation of powers.

The lawsuit calls for judicial intervention to reaffirm state authority over crypto regulation and prevent further SEC encroachment. 

Coming under increased pressure, Gensler recently teased the industry about his potential resignation in what seems to be a farewell message.

In a speech titled "Car Keys, Football, and Effective Administration" at the Practicing Law Institute and the 56th Annual Institute on Securities Regulation, Gensler discussed SEC topics including markets, governance, accounting, crypto, and even football.