Crypto startup challenges SEC over regulatory authority in Texas court

Crypto startup Lejilex has filed a legal challenge against the United States Securities and Exchange Commission (SEC), accusing the agency of overstepping its regulatory power. 

The Texas-based company, part of the Crypto Freedom Alliance of Texas, seeks a preemptive court ruling to prevent the SEC from taking enforcement action when it launches its crypto exchange later this year. 

Lejilex claims that it facilitates cryptocurrency transactions, not securities sales, and argues the SEC is using a "massive regulatory land grab" to broadly classify crypto assets as securities. 

The firm submitted its request for summary judgment on October 3, contending that the SEC's expansion of authority is unjustified. 

The SEC, in its response, asserts that Lejilex's lawsuit is an attempt to get the court to rule that cryptocurrencies can never be considered securities. 

The agency also questioned whether Lejilex has legal standing to bring the case, noting that no enforcement action has been taken against the company. 

Lejilex's legal efforts began in February when the startup asked the court to rule that listing existing tokens on its platform would not violate securities laws. 

Co-founder Mike Wawszczak said, “We wish we were launching our business instead of filing a lawsuit, but here we are.” 

This case comes amid growing tensions between the SEC and crypto companies. 

Paul Grewal, chief legal officer at Coinbase, criticized the SEC’s inconsistent arguments, saying the agency tells different judges conflicting narratives regarding digital assets. 

The outcome of Lejilex’s case could impact broader regulatory approaches to cryptocurrency in the U.S.