18 States Sue SEC Chairman Gensler Over Alleged Regulatory Overreach
The cryptocurrency community has criticized the US Securities and Exchange Commission (SEC) under Chairman Gary Gensler for months. Gensler’s regulatory approach has particularly frustrated Ripple executives. Currently, critics are suing Gensler for alleged “gross government overreach.”
According to Eleanor Terrett of Fox Business, 18 states, led by Republican attorneys general including Kentucky's Russell Coleman, are challenging Gensler’s management style, claiming he bullies the crypto sector.
Lawsuit Claims Gensler Is ‘Overstepping His Authority’
The lawsuit reflects growing discontent over Gensler’s crypto regulation strategy. Attorney General Coleman argues that the SEC is attempting to usurp state authority in 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 approach to “regulation by enforcement” diminishes state control and limits their ability to shape economic policies. The lawsuit contends that the SEC's aggressive stance deviates from its original mandate and aims to establish clear rules for stakeholders instead of attacking the industry.
Gensler’s Ongoing Conflict With Crypto
The crypto sector views Gensler as adversarial. After assuming his role, Gensler initiated investigations into major crypto firms, asserting that many operate in “legal gray zones.”
Ripple Labs, which develops XRP, has been involved in a prolonged dispute with the SEC regarding the sale of its digital token. The regulator claims Ripple violated securities laws by selling XRP without proper registration.
Last year, Ripple achieved a legal victory when US district judge Analisa Torres ruled that XRP was subject to securities law when marketed to institutional investors.
Gensler Addresses Crypto-Related Issues
Recently, Gary Gensler defended his record as SEC Chairman, stating that courts have upheld the agency's actions aimed at investor protection, countering claims of lacking authority.
With Republican Donald Trump winning the primaries, Gensler may face changes ahead. Trump has expressed support for Bitcoin and cryptocurrencies and indicated plans to replace Gensler as SEC chair if elected.
Featured image from Fortune, chart from TradingView