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18 US states have filed a lawsuit against the SEC for overreach in crypto regulation.
The lawsuit highlights state-level crypto regulatory frameworks and challenges federal authority.

18 US states have filed a lawsuit against the SEC and its commissioners, challenging what they describe as unconstitutional overreach in crypto industry regulation.

The lawsuit, which includes states such as Texas, Florida, and Kentucky, challenges the SEC’s aggressive regulation of the $3 trillion crypto market under the leadership of Chairman Gary Gensler.

The plaintiffs claim that the SEC’s actions infringe on states’ rights to regulate their own economies, particularly in the growing digital asset sector.

The complaint, filed in the Eastern District of Kentucky, highlights how the SEC has committed “gross government overreach” through its “regulation by enforcement” strategy, targeting crypto firms without the proper authority granted by Congress.

This legal action seeks relief, arguing that the SEC’s push for federal regulation of blockchain markets undermines state-led frameworks designed to foster innovation and protect consumers.

The lawsuit highlights states as “laboratories for experimentation” in regulating emerging sectors like blockchain, pointing out that while states have developed diverse approaches, the SEC has disregarded these efforts to assert its control.

In response, Gary Gensler and the SEC commissioners are accused of undermining the constitutional authority of state governments, with the lawsuit serving as a direct challenge to the SEC’s enforcement actions in the crypto space.

This lawsuit comes as Gary Gensler, SEC Chair, recently hinted at a potential resignation in a statement earlier today, reflecting on his tenure and the challenges ahead for the agency.