A high-profile lawsuit filed by 18 U.S. states against the Securities and Exchange Commission (SEC) over its crypto authority has been paused for 60 days, following signs of a potential resolution under the agency’s new leadership.
On Tuesday, U.S. District Judge Gregory Van Tatenhove approved a joint motion to stay the case, citing the SEC’s acknowledgment that “this case could potentially be resolved.” The pause reflects the agency’s evolving enforcement stance as it undergoes a leadership transition and broader recalibration of its approach to digital assets.
The lawsuit, originally filed in November 2024, accused the SEC of regulatory overreach in classifying digital assets as securities. The plaintiffs—state attorneys general supported by crypto advocacy groups—argued the Commission’s tactics stifled innovation and exceeded its statutory authority.
With the SEC now signaling a more collaborative posture, both sides agreed to reassess. A joint status report is due within 30 days, possibly setting the stage for a negotiated outcome or voluntary dismissal.
States Challenge SEC Overreach in Crypto Authority Case
The paused legal action stems from a lawsuit filed last November by 18 state attorneys general, led by Kentucky Attorney General Russell Coleman. The suit alleged that the SEC had overstepped its mandate under former Chair Gary Gensler.
According to the complaint, the agency was attempting to regulate through enforcement actions rather than following formal rulemaking procedures. It labeled the SEC’s crackdown on crypto firms a “unilateral power grab” that bypassed state jurisdiction and congressional oversight.
The coalition claimed the Commission’s classification of digital assets as securities lacked legal foundation and violated principles of federalism and due process. “The SEC has sought to unilaterally wrest regulatory authority away from the States,” the complaint stated.
The plaintiffs asked the court to bar the SEC from continuing enforcement actions based on interpretations that were never formally adopted or subject to public comment.
SEC Leadership Change Signals Softer Crypto Approach
The SEC is undergoing a major transformation, signaling a significant policy shift in how it engages with the crypto industry. Earlier this month, the Senate confirmed Paul Atkins—a former SEC commissioner and known pro-crypto advocate—as the agency’s new Chair, replacing acting head Mark Uyeda.
The leadership transition comes amid a clear regulatory pivot. Uyeda, himself supportive of digital assets, had already overseen the dismissal or suspension of at least a dozen enforcement cases against crypto firms—many originally launched under Gensler’s tenure.
Among the cases paused or dropped were investigations into Coinbase, Kraken, Uniswap Labs, OpenSea, Consensys, Robinhood Crypto, Crypto.com, Gemini Trust, Immutable, and Yuga Labs. These rollbacks highlight a dramatic softening in the Commission’s enforcement stance and a shift toward regulatory dialogue and settlement.
Quick Facts
- A federal judge paused an 18-state lawsuit challenging the SEC’s crypto authority
- The suit claimed SEC actions under Gary Gensler lacked legal grounding
- The SEC, now under Paul Atkins, is signaling a regulatory reset
- Lawsuit pauses across other crypto cases suggest a shift toward negotiated resolutions
