Crypto startup Lejilex and the United States Securities and Exchange Commission (SEC) are engaged in a legal battle over the classification of cryptocurrencies. Both parties have submitted competing briefs for summary judgment in a Texas federal court.
Lejilex, which is part of the Crypto Freedom Alliance of Texas, filed its brief on October 3. The company argues that it intends to facilitate crypto transactions and not to sell securities. In its filing, Lejilex accuses the SEC of overstepping its regulatory authority.
SEC Defends Stance on Securities
In its brief, Lejilex contends that the SEC seeks to broadly classify asset sales as security transactions. The company claims that the SEC has maintained an approach that allows for a “transformative expansion” of its regulatory power without any limitations.
Conversely, the SEC argues that the lawsuit attempts to convince the court that cryptocurrencies should never be considered securities. The SEC has also raised the issue of standing, asserting that Lejilex has not faced any agency enforcement actions against it.
Earlier this year, in February, Lejilex requested the court to determine that listing pre-existing tokens would not violate securities laws. Co-founder Mike Wawszczak expressed frustration, stating: “We wish we were launching our business instead of filing a lawsuit, but here we are,” in an interview with Reuters.
Crypto startup Lejilex has asked a Texas federal court for a preemptive ruling against SEC enforcement actions, claiming it facilitates crypto transactions, not securities, and accusing the agency of regulatory overreach.
— The Crypto News ????️ (@TCNCRYPTO) October 4, 2024
Coinbase's Legal Battle Continues
On October 4, Coinbase Chief Legal Officer Paul Grewal commented on the briefs in a post on X (formerly Twitter). He criticized the SEC's stance, arguing that the classification of a digital asset transaction should not depend on the asset's nature.
Grewal highlighted inconsistencies in the SEC's arguments, referencing a previous case where the SEC took a contradictory position.Coinbase is currently involved in a lawsuit with the SEC, which claims theexchange sold unregistered securities, a charge Coinbase denies.
Grewal emphasized the importance of consistency in government actions, stating: “This is our government acting in the name of all of us. Telling one judge one thing while telling another the opposite should not be tolerated. We deserve better.”
This article was written by Tareq Sikder at www.financemagnates.com.
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