News emerged in March last year that the United States SEC had sent out “scores of subpoenas” as part of a giant probe into the cryptocurrency industry. However, a new report from Coindesk has revealed that one year later, the exact size and implications of the sweep are still unknown.
Indeed, there are even conflicting reports on when the subpoenas and RFIs (requests for information) began to roll out. One attorney told Coindesk that there have only been about 80 subpoenas in total and that they didn’t really start coming until the fall.
However, other attorneys have estimated that hundreds of subpoenas have been issued by the SEC and that there has been a “recent uptick” in the number that is being sent out.
“They are shotgunning these, we’ve been warning people about this for months now,” one anonymous attorney told Coindesk.
Curiosity, Enforcement, or Something Else?
While the quantity of the subpoenas is questionable, their content is relatively well known. According to the report, they come as “hyper-detailed” 25-page documents that demand “every bit of communication around the token launch.”
Although larger companies and financial institutions are used to dealing with these kinds of detailed demands, these subpoenas could have a damaging effect on startups and small companies who may not have the legal resources to comply with the subpoena’s requests. Indeed, “for any normal person trying to respond, it would be hellish,” the same lawyer told Coindesk.
However, the SEC apparently offers an alternative option to companies who may be having trouble fulfilling the subpoena’s requests--”just come in and talk to us,” the lawyer said, describing the alternative option.
Subpoenas Are the SEC's "Tool to Understand the World"
It could be possible that more than anything else, the subpoenas represent the SEC’s effort to understand the cryptocurrency industry. “This is the tool they have to understand the world,” a separate industry lawyer told CoinDesk.
The subpoenas could also be seen as an attempt to scare industry participants into Compliance . A bark far worse than the SEC’s bite. Indeed, a handful of concrete enforcement actions have been taken by the Commission, with cases including Munchee and Arisebank.
A third theory proposes that the SEC is actually seeking to take action against companies who share some unknown factor. “There have been occasions where [the SEC] has sent out more than one subpoena at one time …if it is not indicative of a major initiative across the space, they’re all related to the same case or they’re all interrelated,” said Carol Van Cleef, CEO of decentralized technology solutions company Luminous, to Coindesk.
