Eighteen states have sued the U.S. Securities and Exchange Commission and members of the Biden administration for actions they argue the agency has illegally taken against cryptocurrency companies and their employees.

The lawsuit was filed in the U.S. District Court for the Eastern District of Kentucky Frankfort Division and names the SEC, its chair and four commissioners as defendants.

The Commonwealth of Kentucky filed the lawsuit, joined by the attorney generals of Nebraska, Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, Oklahoma, Florida and DeFi Education Fund.

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In response to the development of new blockchain technology, states have begun their own oversight of the digital asset industry, the 51-page brief notes. “Some states have enacted regulatory regimes for financial institutions focused on digital assets; others have required digital asset platforms to obtain money-transmitter licenses and security bonds to guarantee liquidity; others have embraced the rise of digital assets more generally, such as by allowing citizens to use digital assets to pay taxes and fees, or by amending their unclaimed-property laws to provide specific procedures for escheatment of digital assets.”

In Kentucky, its General Assembly passed a law empowering the commonwealth to take control of abandoned property, including virtual currency. “The SEC’s unlawful regulation prevents Kentucky from enforcing its laws as a sovereign state,” Kentucky AG Russell Coleman said.

Kentucky has the second highest collective computing power in the U.S. devoted to crypto mining and offers tax breaks to digital asset miners to encourage investment and job creation, the AG’s office says. “Roughly one in five Americans – more than 50 million people – has acquired a digital asset” and American businesses accept Bitcoin and other digital assets as payment forms, it notes.

Under the Biden administration’s SEC Chair Gary Gensler, the SEC “launched a regulatory assault against crypto companies,” Coleman argues, by labeling cryptocurrencies as investment contracts, like stocks or bonds, making them subject to SEC regulation.

While states have implemented their own regulatory measures, “Congress has repeatedly declined proposals to give federal agencies broad regulatory power over digital assets,” the lawsuit notes. The SEC “has not respected” state authority and “without Congressional authorization … sought to unilaterally wrest regulatory authority away from the states through an ongoing series of enforcement actions targeting the digital asset industry,” the AGs argue.