The Digital Chamber (TDC) has submitted a motion for leave to file an amicus brief in LEJILEX;CRYPTO FREEDOM ALLIANCE OF TEXAS V. SEC, in support of Plaintiffs’ Motion for Summary Judgment.
What did the Plaintiffs allege?
In the complaint, plaintiffs allege that they brought the action to seek declaratory and injunctive relief to:
- Prevent the SEC from unlawfully charging them and their members with violating the US securities laws based on the SEC’s “fundamentally mistaken view” of its regulatory power.
- End the SEC’s efforts to unlawfully extend its regulatory authority to cover nearly all digital assets.
LEJILEX’s Position
LEJILEX is requesting judicial relief to ensure it does not need to register with the SEC as a securities exchange, broker, or clearing agency. According to the complaint, LEJILEX faces a genuine threat that when its Legit.Exchange launches, the SEC will bring an enforcement action claiming that LEJILEX is operating an unregistered securities exchange, broker, or clearing agency. LEJILEX argues that it is impossible to register in these capacities because the SEC has not established any regulations providing for the registrations of digital asset platforms like Legit.Exchange.
What does our brief argue?
In our brief, The Digital Chamber highlights the fact that we have long called for the SEC to work cooperatively with the digital assets industry, other federal agencies, and Congress to develop rules that provide industry participants with fair notice of what the law requires and how they can comply. Rather than do so, however, the SEC has pursued regulation of essentially the entire crypto industry through enforcement actions, based on a dubious, far-reaching, and ahistorical interpretation of the statutory terms “security” and “investment contract” in an unprecedented effort to greatly expand its regulatory power under the securities laws.
The brief also examines how the SEC’s lack of clarity and contradictory stances, including regarding which digital assets are securities and within the SEC’s purview and which are commodities and within the CFTC’s purview, injure the digital asset industry and have caused both business and innovation to move offshore. It also sets out why the US securities laws are a poor fit for decentralized blockchains and how the numerous crypto companies that have sought registration or exclusions have faced SEC enforcement actions.
The brief also discusses that, while Congress is actively working on legislation to regulate the digital asset industry and blockchain technology, the SEC has usurped the Legislative Branch’s prerogative to regulate this new technology and industry in a responsible way that fosters innovation in the United States.
“By submitting this motion, we are taking a stand before the SEC’s anticipated overreach occurs. Our goal is to ensure that the SEC does not unlawfully expand its regulatory authority over the entire digital asset industry,” said Perianne Boring, Founder and CEO of The Digital Chamber. “We are hopeful that the Court will consider the arguments laid out in our brief, and we will continue to fight against the SEC’s overreach.”
TDC is represented in this matter by Baker Hostetler. We appreciate the contributions to this initiative by the Baker Hostetler team and other members of The Digital Chamber.
Read the full amicus brief here. TDC experts are available for comment, please contact: press@digitalchamber.org