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State attorneys and the DeFi Education Fund have initiated a lawsuit against the SEC, resulting in a federal judge approving a request for a temporary pause in the proceedings. The complaint alleges that the regulatory agency exceeded its authority in its sanctions against cryptocurrency exchanges.
Claims Against the SEC
According to the complaint, the SEC was unilaterally exercising authority over the regulation of crypto assets. The lawsuit states, “The SEC has attempted to unilaterally assume regulatory power over the crypto asset industry through a series of enforcement actions, based on the theory that nearly all transactions involving crypto assets qualify as ‘investment contracts’ without Congressional authorization.”
Judge’s Ruling and Reasoning
Judge Gregory Van Tatenhove from the Eastern District of Kentucky has decided to pause the lawsuit for 60 days following the appointment of pro-crypto SEC chairman Paul Atkins. This ruling is deemed significant concerning the trajectory of current applications and related legal proceedings.
The SEC’s approach towards the crypto asset sector has undergone a positive shift, influencing the decision to pause the lawsuit. The termination of investigations into major cases like Ripple 
$2 and Kraken indicates a change in the regulatory agency’s policy.
This legal process raises discussions about the boundaries of the regulatory authority, highlighting disagreements among the parties involved regarding how jurisdiction should be shared. Stakeholders criticize the existing regulations as inadequate. Ultimately, the SEC appears to be attempting to mitigate the criticisms it faced at the time the lawsuit was initiated, arguably rendering this lawsuit unnecessary.
The lawsuit’s proceedings and changes in SEC practices could significantly influence the dynamics faced by the digital asset market in the future. Readers may find it beneficial to monitor regulatory developments and updates within the sector.
