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Texas Company Sues SEC in Northern District Court!!! A Texas company in preparation for an upcoming crypto exchange has joined forces with the Texas Crypto Freedom Alliance (CFAT) in hopes of preventing Securities Trading charges.
CFAT and digital asset company Lejilex have filed a lawsuit against the US Securities and Exchange Commission (SEC), asking the court to make a decision on the status of digital assets sold in the secondary market.
CFAT and Lejilex, where it is reported that Mike Wawszczak, who is a lawyer and the general counsel of Alliance DAO, plans to launch a crypto exchange called Legit.Exchange, filed a lawsuit against the SEC on February 21 in the North Texas District Court in Fort Worth, according to his LinkedIn profile.
The lawsuit presents a claim against the SEC with the Declaratory Judgment Act and a case shown as an example in 2007. The plaintiffs are asking the court for several decisions, among them:
“a. Declare that secondary market sales of digital assets, as Lejilex plans to facilitate through the Legit.Exchange, are not securities sales as defined in the 1934 Securities Exchange Act and 1933 Securities Act.”
Legit.Exchange (SEC)
They also want the court to declare that Legit.Exchange is not an unregistered securities exchange and Lejilex will not be an unregistered broker or clearinghouse by operating the exchange.
The plaintiffs argued that “the SEC’s recent punitive actions have adopted a new and original position that ‘investment contracts’ include almost all digital asset transactions under federal securities laws.”
Following, they said, “This position leaves law-abiding participants in the digital asset industry at risk of exposure to the SEC’s punishment actions for not conforming to the SEC’s exaggerated understanding of its authority.” The complaint continued:
“Despite the continuous pleas of industry participants, the SEC has refrained from publishing any specific regulation explaining its new position, which would force the agency to test it by forming the rule of awareness and comment.”
Lejilex described Legit.Exchange
Lejilex described Legit.Exchange as a digital asset trading platform that does not have a customer account. It uses smart contracts to allow users to trade with each other. Users will never know each other’s identities. Lejilex will control which assets are allowed to trade and perform functions such as verification for a fee, but will not store user assets. The company’s website stated that it plans to launch Legit.Exchange by the end of the year.
According to Lejilex’s website, the company was established in 2023. The (X) renamed asset (previously named Twitter) dates back to September. CFAT was also established in September. Other supporters of the nonprofit organization include a16z crypto, Coinbase, Ledger, Bain Capital Crypto, Blockchain Capital, and Paradigm.
The lawsuit addressed the Howey test in detail. It also made references to the Wahi lawsuit and the SEC’s actions against LBRY, Binance, and many other companies.