A coalition of state attorneys general and the DeFi Education Fund has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) and its five commissioners, claiming that the agency has exceeded its authority with recent enforcement actions against cryptocurrency exchanges.

The lawsuit, submitted on Thursday afternoon in the U.S. District Court for the Eastern District of Kentucky, seeks a court order to prevent the SEC from initiating further enforcement actions. The lawsuit argues that the SEC's current approach represents an unlawful extension of executive power and breaches the Administrative Procedures Act.

"The SEC’s sweeping assertion of regulatory jurisdiction is untenable. The digital assets implicated here are just that — assets, not investment contracts covered by federal securities laws."
(Translation: La aserción del SEC de la jurisdicción regulatoria es insostenible. Los activos digitales implicados aquí son eso: activos, no contratos de inversión cubiertos por las leyes federales de valores.)

This case arrives amid expectations that Gary Gensler, the SEC chairman appointed by President Biden, may soon be replaced by a successor who is more favorable to the industry, potentially appointed by Donald Trump.

The lawsuit emphasizes that the SEC's activities infringe upon the rights of states to regulate the crypto sector independently.

Miller Whitehouse-Levine, the CEO of the DeFi Education Fund, commented that the performance target of this lawsuit is to curb SEC overreach, asserting that the current crypto regulatory framework obstructs the growth of accessible and efficient financial services.

In counters, an SEC spokesperson stated, "We don’t comment on litigation. State securities regulators have played a vital role in exposing and addressing misconduct in the crypto markets."

Earlier, Gensler reiterated his stance regarding the SEC's stringent oversight over crypto, insisting on the necessity of regulation to mitigate investor harm associated with the industry, especially given the potential for speculative investing and illicit use cases.

Russell Coleman, the Kentucky Attorney General, remarked that the lawsuit is intended to protect Kentuckians from excessive federal interference, advocating for their financial autonomy.