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In a bold challenge to federal authority, 18 U.S. states have filed a lawsuit against the Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, accusing the agency of overstepping its regulatory bounds.
The lawsuit alleges that the SEC’s aggressive enforcement actions against the cryptocurrency industry represent an unauthorized expansion of its power. Ripple’s Chief Legal Officer, Stuart Alderoty, called the legal action a sharp rebuke of Gensler’s contentious leadership.
States Push Back Against Federal Crypto Control
The lawsuit includes states such as Nebraska, Tennessee, Wyoming, Kentucky, West Virginia, Iowa, Texas, Mississippi, Ohio, and Montana. Their complaint argues that the SEC has exceeded its statutory limits by attempting to usurp regulatory authority from the states without Congressional approval. Nebraska Attorney General Mike Hilgers and Kentucky AG Russell Coleman are reportedly leading the legal action.
In a separate statement, Hilgers accused the SEC of trying to categorize cryptocurrencies as investment contracts, asserting regulatory control akin to that over stocks and bonds. He criticized the Biden Administration’s SEC for stifling innovation with excessive red tape, warning it could hinder the financial sector’s growth.
Ripple’s Alderoty Blasts Gensler’s Policies
Ripple’s Stuart Alderoty, a long-standing critic of Gensler, emphasized the detrimental impact of SEC policies on the crypto industry. In his latest tweet, he referred to Gensler’s legacy as marred by controversy and accused him of undermining innovation. Alderoty predicted Gensler would ultimately be remembered as a minor figure in SEC history, given his failure to support technological advancement.
Read also: U.S. 2024 Election: SEC Chair Gensler’s Future on the Line
Meanwhile, speculation on Gensler’s resignation has grown, fueled by Donald Trump’s promise to restructure the SEC. Gensler’s recent remarks at the Practising Law Institute’s 56th annual conference on securities regulation, reflecting on his tenure and the agency’s regulatory efforts, were interpreted by many as a hint at his potential departure.
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