The Texas company filed a lawsuit against the SEC’s crypto authority
The Crypto Freedom Alliance of Texas (CFAT) and digital asset company Legilex have filed a lawsuit against the United States Securities and Exchange Commission (SEC), asking the court to determine the status of digital assets sold on the secondary market.
CFAT and Lejilex filed suit against the SEC in the North Texas District Court in Fort Worth on Feb. 21. Legilex Legilex plans to launch a crypto exchange called Legit.Exchange. According to his LinkedIn profile, Legilex founder Mike Wawszczak is Alliance DAO's attorney and general counsel.
The lawsuit cited the Disclosure Act and the 2007 lawsuit as a precedent for filing a lawsuit against the SEC. The plaintiffs are asking the court for several rulings, including:
“A. Declare that secondary market sales of digital assets that LEJILEX intends to facilitate through the Legt.Exchange are not securities sales as defined by the Exchange Act of 1934 and the Securities Act of 1933.”
In addition, they ask the court to declare that Lejilex is not an unregistered securities exchange and that Lejilex is operating the exchange as an unregistered broker or unregistered clearing agency.
The plaintiffs argued that “the SEC's recent enforcement actions constitute a new position under the federal securities laws that all digital asset transactions constitute ‘investment contracts'.”
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He continued, “That position raises concerns among law-abiding participants in the digital asset industry that they could be subject to SEC enforcement actions for failure to comply with the SEC's perceived overreaching of its own jurisdiction.” The complaint continued:
“Despite repeated pleas from industry participants, the SEC has refrained from issuing any clear rulemaking outlining its new position, which would require the agency to provide reasons for notice and comment guidance.”
Legilex describes Legilex as a deregulated digital asset trading platform that uses smart contracts to enable users to trade with each other. Users never know each other's identity. Lejilex controls which assets can be traded and performs functions such as verification of payment in return, but does not protect user assets. The company plans to launch a lite exchange by the end of the year, the website said.
So this is very big. Today, @LEJILEX and the Crypto Freedom Alliance of Texas (CFAT) sued the SEC, seeking a declaration of “secondary market sales of digital assets that LEJILEX purports to facilitate through securities sales”…
— Amanda Tuminelli (@amandatums) February 21, 2024
Legilex was founded in 2023, according to its website. His X (formerly Twitter) presence runs through September. CFAT was also established in September. Other backers of the non-profit include a16z crypto, Coinbase, Ledger, Bain Capital Crypto, Blockchain Capital and Paradigm.
The suit discussed the Hawaii test at length. He also mentioned the Wahine case and SEC actions against LBRY, Binance and many others.
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