Additionally, a Kentucky federal judge has issued a 60-day stay in the lawsuit. This lawsuit, led by 18 state AGs and the DeFi Education Fund against the SEC. In early November 2023, a new legal challenge appeared on the scene. This lawsuit argues that the SEC has overstepped its boundaries by regulating cryptocurrency exchanges through enforcement actions. On April 16, 2025, Judge Gregory Van Tatenhove of the District Court for the District of Kentucky ordered the stay. Both the plaintiffs and the SEC believed that new leadership at the agency would make all the difference in settling their contentious dispute.
In fact, just a month earlier, the SEC issued a mid-March denial that leadership changes would make the ongoing legal fight moot. Paul Atkins, who replaced his predecessor Mark Uyeda, who replaced Gary Gensler at this job early this month. Gensler’s priorities had long centered around beefing up watchdog enforcement over the crypto industry during his time in office.
Republican state attorneys general from Kentucky, Florida, Texas, and Ohio are among those challenging the SEC’s crypto exchange regulation methods, arguing that they attempt to claim federal authority through state-regulated areas. The plaintiffs make the federalism argument that the SEC is overstepping its turf. Specifically, they claim that the agency’s regulatory actions require explicit legislative backing from the states to remove their jurisdiction. Further, they claim that the former SEC Chair Gary Gensler overextended the regulator. He did this unilaterally, without congressional approval.
Under the new SEC leadership, this is part of a broader pattern of surprising suspension or dismissal of lawsuits. On April 16th, the DeFi Educational Fund allied with the Blockchain Association and Texas Blockchain Council. Collectively, they agreed to drop their lawsuit with the IRS. Since the DeFi broker rule was repealed, it has become a moot point. This dismissal came just three days after President Donald Trump signed the bill repealing the treasury rule on April 11. As a reminder, the repealed rule would have forced DeFi protocols to report their users’ transactions to the IRS.
The judge has ordered the parties to submit a joint status report in 30 days. This report will provide an update on whether the change in SEC leadership has addressed the concerns raised in the lawsuit.
