Crypto startup Lejilex and the United States Securities and Exchange Commission have filed competing briefs for summary judgment in a Texas federal court, escalating their legal battle over crypto’s classification.
Lejilex, part of the Crypto Freedom Alliance of Texas, said in its Oct. 3 brief that it would facilitate crypto transactions, not sell securities, and accused the SEC of overreaching its regulatory power.
“The fact that the SEC perceives digital assets to be different is no justification for its massive regulatory land grab.”
The Texas-based firm was founded last year and plans to open a crypto exchange by the end of 2024. It seeks a preemptive ruling that its business won’t violate securities laws.
Lejilex said that the SEC wants to paint asset sales broadly as security transactions and has clung to the notion that nothing should limit this “transformative expansion of its regulatory power.”
However, the SEC claims the lawsuit attempts to get the court to rule that cryptocurrencies can never count as securities.
The SEC also raised the issue of standing, arguing that Lejilex hasn’t had any agency enforcement action against it.
In February, Lejilex asked 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,” co-founder Mike Wawszczak told Reuters.
In an Oct. 4 X post, Coinbase chief legal officer Paul Grewal commented on the briefs, claiming the SEC’s arguments about “whether a digital-asset transaction is a securities transaction is not determined by the nature of the asset” are inconsistent.
“It’s remarkable because they argued the precise opposite to Judge Failla in our case,” he said. The SEC sued Coinbase last year, claiming it sold unregistered securities, which the exchange denies.
Source: Paul Grewal
“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,” Grewal said.
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