A U.S. federal judge has issued a 60-day stay on a lawsuit filed by 18 Republican state attorneys general and the DeFi Education Fund against the Securities and Exchange Commission (SEC). The pause comes amid leadership changes within the agency that could impact the proceedings.
Judge Gregory Van Tatenhove of the Kentucky District Court granted the stay on April 16, following a filing by the SEC suggesting that the dispute might be resolved with the arrival of new leadership at the agency.
The judge has mandated that all parties provide a joint status update within the next 30 days.
SEC Accused of Regulatory Overreach in Crypto Enforcement Case
The lawsuit, initiated in November 2024, alleges that the SEC has exceeded its regulatory powers, particularly in relation to its stringent enforcement actions against cryptocurrency exchanges.
Leading the plaintiffs are attorneys general from states such as Texas, Florida, Wyoming, and Ohio, who contend that the SEC’s efforts equate to “gross government overreach” and infringe on federalism principles.
“Without Congressional authorization, the SEC has sought to unilaterally wrest regulatory authority away from the States,” the lawsuit asserts.
Legal developments have shifted following the appointment of Paul Atkins, a former Wall Street advisor and board member for numerous crypto advocacy organizations, as the new SEC chair earlier this month.
Atkins replaces acting chair Mark Uyeda and succeeds former chairman Gary Gensler, whose leadership was characterized by increased scrutiny of digital asset platforms.
"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." — 18 States and DEF in last week’s lawsuit against the SEC.
Check out the latest DEF… pic.twitter.com/c1y1gvQOBa
— DeFi Education Fund (@fund_defi) November 19, 2024
The suspension of the lawsuit coincides with a general trend of de-escalation seen in crypto-related regulatory actions.
On the same date, the DeFi Education Fund, alongside the Blockchain Association and the Texas Blockchain Council, chose to voluntarily dismiss their lawsuit against the Internal Revenue Service (IRS), which challenged the now-repealed “DeFi broker rule.” This rule mandated that decentralized finance protocols report user transactions.
This dismissal followed President Donald Trump’s enactment of a bill on April 11 to nullify the controversial regulation.
Trump-Era Changes Indicate SEC’s Reevaluation of Crypto Regulation
The SEC’s recent adjustment in stance under President Trump signals a broader reassessment of the agency’s strategy regarding digital assets.
On April 5, Uyeda announced that, in alignment with Trump’s agenda for deregulation and guidance from the Department of Government Efficiency (DOGE), led by Elon Musk, the SEC is reassessing seven staff-issued statements, five of which pertain to cryptocurrencies.
Statement from Acting Chairman Mark Uyeda: Pursuant to Executive Order 14192, Unleashing Prosperity Through Deregulation, together with recommendations from DOGE, I have requested Securities and Exchange Commission staff promptly to review the following staff statements.
— U.S. Securities and Exchange Commission (@SECGov) April 5, 2025
Included in the review is a 2019 framework from the SEC’s FinHub, which evaluated when sales of digital assets could be categorized as investment contracts under the Howey test.
Additional documents under reconsideration involve statements from the Divisions of Investment Management, Corporation Finance, and Examinations, addressing concerns related to Bitcoin futures, crypto custody, and industry-wide bankruptcies that occurred in 2022.
Under Atkins’ guidance, the SEC has already withdrawn or postponed several significant legal actions against cryptocurrency firms.
The agency has discontinued lawsuits against Coinbase and Cumberland DRW earlier this year, and a separate inquiry into Uniswap Labs was closed in February without any enforcement action.
In its latest decision, the SEC concluded its investigation into CyberKongz, a notable Ethereum-based NFT and gaming project, without taking any enforcement action, as announced by the team on Tuesday.
The post Judge Pauses 18-State Lawsuit Against SEC Amid Leadership Shakeup appeared first on Finance Newso.
