Eighteen US states, including Texas, Nebraska, and Kentucky, have filed a lawsuit against the Securities and Exchange Commission (SEC) and its chair, Gary Gensler.
The states accuse the SEC of going too far in its efforts to regulate cryptocurrencies and claim the agency has acted without proper approval from Congress.
This lawsuit, filed on Thursday, is supported by the DeFi Education Fund, a group that advocates for fair treatment of the crypto industry.
The states argue that the SEC’s actions amount to “government overreach”. They believe the SEC is enforcing rules unfairly by suing companies instead of creating clear regulations.
“Congress has repeatedly declined proposals to give federal agencies broad regulatory power over digital assets. The SEC has not respected this allocation of authority”, the lawsuit states.
The attorneys general leading this effort claim that Gensler’s “regulation by enforcement” approach is problematic. They say that instead of providing guidance to the industry, the SEC has been targeting individual companies.
The SEC declined to comment on the case, and it is unclear how the lawsuit will proceed. Experts believe this lawsuit may also be a way to pressurise Gensler to step down.
SEC leadership may be changing
Gary Gensler’s time as the SEC chair could be coming to an end. After Donald Trump’s recent presidential victory, there is speculation that Gensler may leave the agency.
Although Trump cannot directly fire him, he can demote Gensler and appoint someone else as the acting chair.
This kind of leadership change is common when a new administration takes office. A new chair could bring significant changes to how the SEC handles cryptocurrency cases.
During his tenure, Gensler has been tough on crypto. Over half of all SEC enforcement actions related to cryptocurrencies have occurred under his leadership. Many in the crypto industry view his approach as overly aggressive.
Gensler recently defended his actions, stating that he is “proud” of the work the SEC has done to protect American investors. However, his departure could mean the SEC may take a different approach.
Some experts believe that a new chair might settle ongoing cases against crypto companies instead of continuing lengthy legal battles.
Ripple, for instance, has been fighting the SEC in court for four years. A settlement would allow Ripple to move forward without the uncertainty of ongoing litigation.
The CEO of Consensys, Joe Lubin, said he expects a more crypto-friendly environment under Trump’s presidency.
He suggested that many current SEC lawsuits might be dismissed or resolved, which could be a major win for companies like Ripple and others targeted by the SEC, such as Solana ($SOL) and Cardano ($ADA).
Ripple’s comeback
Ripple’s $XRP token has been performing well in the market recently. Its price has risen from $0.50 to $0.84, a 47% increase in just a few days.
This is the highest price $XRP has reached since April 2022, although it is still far below its all-time high of $1.60 from May 2021.
Ripple’s market capitalisation has also grown significantly, reaching $45.44 billion. This places $XRP as the seventh-largest cryptocurrency, just behind Dogecoin ($DOGE).
Ripple’s rise comes after a major legal victory against the SEC in August 2024. In that case, Judge Analisa Torres ruled that $XRP is not a security, which was a significant win for the company. Ripple was fined $125 million, much less than the SEC initially sought.
The victory also brought renewed optimism to the crypto community. If the SEC leadership changes, Ripple and other crypto companies could see more favourable outcomes in future cases.
