18 US states have filed a lawsuit against the Securities and Exchange Commission (SEC) and Chairman Gary Gensler, accusing the financial regulator of “gross government overreach” against the nascent crypto industry.
The plaintiffs include Nebraska, Tennessee, Wyoming, Kentucky, West Virginia, Iowa, Texas, Mississippi, Ohio, Montana, and others. The legal complaint reads:
“The Securities and Exchange Commission (SEC) has not respected this allocation of authority. Instead, without Congressional authorization, the SEC has sought to unilaterally wrest regulatory authority away from the States through an ongoing series of enforcement actions.”
According to the Blockchain Association, the Securities and Exchange Commission’s various legal actions against the crypto industry have collectively cost crypto firms $426 million since 2021 to litigate. Industry executives have long criticized the regulatory agency’s lack of coherent digital asset policy as the biggest hurdle developers face in the United States.
The joint lawsuit from 18 US states against the SEC and Gary Gensler. Source: Eleanor Terrett
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Gary Gensler doubles down amid Trump threats
Following the election of Donald Trump, a shakeup of the SEC’s leadership is widely expected by investors and industry executives — which could come as early as January 2025 when Trump assumes office.
Several individuals are reportedly being considered as potential replacements for Gensler — including SEC Commissioner Mark Uyeda, who has been an outspoken critic of Gensler’s compliance through enforcement approach.
Uyeda appeared on Fox Business in October 2024 to discuss the regulatory climate surrounding cryptocurrencies and called Gensler’s policies “a disaster for the whole industry.”
Dan Gallagher — Robinhood’s chief legal, compliance, and corporate affairs officer — is also being considered for the role of SEC chief. Gallagher was formerly an SEC Commissioner between 2011-2015 and was gearing up to fight against a Wells Notice sent by the SEC to Robinhood Crypto in May 2024.
Despite the looming promise of removal from the incoming President of the United States, Gary Gensler doubled down on his anti-crypto rhetoric in a speech prepared for the Practicing Law Institute’s 56th Annual Institute on Securities Regulation on November 14, 2024.
“This is a field in which over the years there has been significant investor harm, Gensler wrote. The SEC Chair continued, “Aside from speculative investing, and possible use for illicit activities, the vast majority of crypto assets have yet to prove sustainable use cases.”
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