For months, the cryptocurrency community has criticized the US Securities and Exchange Commission (SEC) under Chairman, Gary Gensler. Gensler’s aggressive regulatory approach has irked many in the industry, particularly the Ripple executives. Today, critics are taking Gensler to court over what they claim as the agency’s “gross government overreach.”
According to Eleanor Terrett of Fox Business, 18 states are already frustrated with Gensler’s management style, affecting the crypto industry. Republican attorney generals, including Kentucky’s Russell Coleman, are leading the lawsuit, arguing that the current SEC chair is bullying the sector.
Lawsuit Argues That Gensler Is ‘Overstepping His Authority’
The states’ lawsuit reflects the growing discontent over Gensler’s approach to crypto regulation. According to Attorney General Coleman, the agency is trying to remove the regulatory authority away from states on cryptocurrency enforcement.
SCOOP: 18 U.S. states have filed to sue the @SECGov and its commissioners, accusing them of unconstitutional overreach and unfair persecution of the #crypto industry under the leadership of agency chief @GaryGensler.
The lawsuit, signed by 18 Republican Attorneys General,… pic.twitter.com/wxOovuIRQH
— Eleanor Terrett (@EleanorTerrett) November 14, 2024
Gensler’s “regulation by enforcement” removes the states’ control over regulation and deprives them of the opportunity to define their economic policies. The attorneys further explained that the agency’s crypto crackdown is intense, aggressive, and far removed from its original mandate.
According to the petitioners, Gensler’s management style is more about control than upholding the law or protecting consumers. The lawsuit aims to stop Gensler from aggressively attacking the industry and instead create clear and established rules for stakeholders.
Gensler’s Long-Running Feud With Crypto
The crypto industry currently sees Gensler as its enemy. Immediately after becoming SEC chief, Gensler led investigations and inquiries against the most prominent crypto companies. He has consistently argued that many companies work in “legal gray zones.”
Ripple Labs, the developer of XRP, has a long-running feud with the SEC over the sale of its digital token. The regulator has argued that the company broke the law by selling tokens (XRP) without registering these as securities.
Last year, Ripple Labs scored a court victory when US district judge Analisa Torres found Ripple’s XRP was covered by the country’s securities law when marketed to institutional investors.
Gensler Responds To Crypto-Related Issues
Gary Gensler recently broke his silence and defended his record as Chairman of the SEC during remarks made last Thursday. He emphasized that courts have consistently supported the agency’s actions aimed at protecting investors, rejecting claims that the SEC lacks the authority to enforce securities laws.
However, with Republican Donald Trump winning the selections, Gensler may have a few options left. Trump has consistently signaled his support for Bitcoin and cryptocurrencies and promised to replace him as SEC chair once he starts work in the Oval Office.
Featured image from Fortune, chart from TradingView