Lawsuit Filed by Blockchain Association and Crypto Freedom Alliance Against SEC

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Lawsuit Filed by Blockchain Association and CFAT Against SEC

In a significant legal move, the Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) have jointly filed a lawsuit against the Securities & Exchange Commission (SEC) in a federal court located in Texas. This legal action is a response to the SEC’s recent expansion of the definition of a “dealer” of securities, a move that has sparked controversy within the digital asset industry.

Challenging SEC’s Regulatory Actions in the Crypto Sector

The lawsuit, documented on the Blockchain Association website, highlights the concerns raised by the two crypto groups regarding what they perceive as the SEC’s “misguided attacks” on the digital asset market in the United States. Specifically, the legal challenge is believed to be a response to the SEC’s enforcement actions and litigations involving prominent firms such as Ripple and Coinbase.

Allegations of Regulatory Overreach and Violations

The official statement released by the Blockchain Association and CFAT criticizes the SEC for engaging in what they describe as “arbitrary and capricious rulemaking.” The primary objective of the lawsuit is to invalidate the Dealer Rule introduced by the SEC. The groups argue that the SEC’s actions, which they claim violate the Administrative Procedure Act (APA), create uncertainty and hinder the ability of crypto industry participants to comply with regulatory guidelines.

Central to the lawsuit is the accusation that the SEC unlawfully expanded its interpretation of the term “dealer” as outlined in the Securities Exchange Act of 1934. This reinterpretation, if enforced, has the potential to impact a vast number of Americans and businesses engaged in digital asset trading. The groups assert that the SEC’s broad and ambiguous standards could significantly diverge from established definitions, potentially disrupting established market practices.

In their plea to the court, the Blockchain Association and CFAT seek a declaratory judgment to challenge the SEC’s regulatory overreach and prevent the implementation of the contested rule. Additionally, they are pursuing injunctive relief to halt the enforcement of the revised Dealer Rule, emphasizing the need for clarity and consistency in regulatory actions affecting the crypto industry.