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Ft. Worth Texas Based Crypto Exchange Firm Sues The SEC For Overreach Tactics

Fort Worth-based crypto company Lejilex and lobbying group Crypto Freedom Alliance of Texas (CFAT) claim the SEC has asserted jurisdiction over the industry without a “clear statutory mandate.”

The Texas cryptocurrency company and an industry group sued the U.S. Securities and Exchange Commission (SEC) on Wednesday, saying the regulator has overstepped its authority with malice and forethought, targeting and unconstitutional bureau overreaching and they’re asking a judge to rule that digital assets traded on exchanges are NOT securities.

Lejilex wants the court to rule that listing pre-existing tokens will not violate securities laws.
“We wish we were launching our business instead of filing a lawsuit, but here we are,” Lejilex co-founder Mike Wawszczak said in a statement.

Lejilex says it seeks to run a cryptocurrency platform called Legit.Exchange. The company formed last year said it plans to list digital assets including those the SEC has deemed securities in lawsuits against Coinbase (COIN.O),the largest cryptocurrency exchange in the U.S., and Binance, the world’s largest crypto exchange.

A spokesperson for the SEC did not immediately reply to a request for comment. Both Coinbase and Binance have denied the SEC’s numerous allegations.

CFAT asked the court to block the SEC from suing its members, and said the agency’s assertion of jurisdiction over digital assets has made it harder to convince Texas lawmakers to embrace “sensible crypto based policies.”

A judge in July rejected the argument that an ongoing commitment is required to make an asset a security in the SEC’s case against Ripple Labs. Another judge overseeing the regulator’s lawsuit against Terraform Labs found the “major questions” doctrine does not apply to the cryptocurrency industry. Both of those cases were brought in New York.

They asked the court to apply the “major questions” doctrine, which lets judges invalidate executive agency actions of “vast economic and political significance” unless Congress clearly authorized them.

The group launched last year and counts Coinbase and venture capital firm Andreessen Horowitz’s a16z crypto fund as members.CFAT and Lejilex argue the SEC is wrong to classify digital assets as “investment contracts” because they create no ongoing commitment between creator and purchaser.

The new lawsuit filed in federal court in Fort Worth. This new case was assigned to Judge Reed O’Connor, an appointee of Republican former President George W. Bush with a track record of ruling in favor of conservative litigants challenging laws and regulations governing gun control. Which this brings the industry’s fight with the regulator under the jurisdiction of the 5th U.S. Circuit Court of Appeals. Also noting that more than TWO THIRDS of the judges on the appeals court were appointed by Past Republican Presidents, which makes it the favored venue for challenges to the SEC under the current Disorganized, Corrupt and Seriously Questionable Biden Harris Administration.

Paul Clement, former U.S. Solicitor General represents the plaintiffs.


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