The SEC has shown itself to have a heavy hand when it comes to cryptocurrency. They are not backing down either.
Two companies that it decided to go after are not taking the SEC's action laying down. Telegram and KIK are both fighting back against the United States regulator.
At the core of the dispute is the fact the SEC views ICOs as illegal since they are, in the opinion, securities. Selling unregistered securities is illegal in the United States.
Thus far, most of the companies the SEC went after either folded up shop or paid a fine to make the issue go away. Block.one helped to set a precedent with its settlement for $20 million or so.
Telegram is one of the more popular messenger programs out there. Over the last few years, it realized incredible growth. The platform wants to add cryptocurrency to its application to reward users.
This, of course, is not in alignment with the SEC. Raising money outside the traditional system is going to get their ire up. Telegram found itself in the crosshairs.
Now, we see how the company is willing to drag this out. Not only are they not backing down, they are telling the court that adherence to its ruling is going to take months.
Lawyers representing the messenger giant Telegram have stated that a review of financial records requested by the United States Securities and Exchange Commission (SEC) will take five to seven weeks to prepare.
In a Jan. 9 court filing, the lawyers explained that they must analyze data protection laws in a number of foreign jurisdictions, greatly lengthening the process.
The filing stated that to ensure Telegram’s compliance with all foreign data privacy laws would require an analysis of approximately 4,600 transactions, involving around 770 entities and individuals.
https://cointelegraph.com/news/telegram-lawyers-say-proving-data-privacy-compliance-may-take-months
KIK is another big messenger that decided to fight the SEC in what it views as overreach. The CEO has even gone so far as to say the company would fight the SEC "until it didn't have a dollar left".
In this case, KIK is pushing to go to trial. It wants it to happen quickly since it feels that the SEC has no grounds for its claims.
Kik remains defiant in the face of overwhelming odds, arguing that the commission does not have strong evidence to support their claims. Livingstone had expressed his desire to go to trial as soon as possible, setting May 2020 as a possible target.
https://cointelegraph.com/news/kik-continues-legal-battle-with-sec-requests-trial-date-definition
Regulators operate on a simple premise. They try to gain a bunch of small victories to set precedent before moving onto larger ones. As companies are either found guilty or settle with the payment of a fine, this gives them ammunition to use against other entities.
The challenge here is this only expands the power base for what agencies such as the SEC are doing. Until they suffer a setback, they just keep going without restraint.
Seeing this companies pushing back is encouraging. It is going to take a few verdicts in favor of the defendants to mitigate the SEC's reach. Over time, we could see acts come out of Congress that temper the power it is wielding over crypto, but that is unlikely to present a path to more freedom.
Overall, what all this does is keep buying time. I am a believer that each day we see the world of decentralized cryptocurrency getting stronger. As this occurs, more options are presented to people which gets them out of the traditional system.
Along the same lines, as more crypto is distributed, the wealth that is held in this form increases as time passes. Even without a bull run, many currencies are holding to a range while their tokens allocated increase. This means the overall value, as determined by the market, goes up.
This will only continue if, the speculation is correct, that DeFi really takes off this year.
The battle that is being waged is one with high stakes. There is a lot of money on the line and the existing entities seek to keep total control like they always had.
For this reason, those involved in the marketing and development of crypto related projects have to be equally devoted to the outcome desired.
This is not going to just disappear.
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Good to see this push back.
US case law has relied on the Howey Test for securities for a long time:
Some ICOs are definitely securities. Look at the real estate scams that have popped up and disappeared over the past couple years.
Some are definitely not scams. Like BNB and other utility tokens, there is no "enterprise" or profits.
Some are weird, and maybe are or maybe aren't. I'm pretty optimistic that the lawyers in these cases will be better than government lawyers.
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I have no problem with the SEC going after fraud. That is what it is there for. The overt scams are what the SEC should be focused upon. Fraud is the same regardless of the asset used.
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Sure, but then they wouldn't be able to justify their budgets. It's all about them dollars.
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Indeed, simply delaying the process (even in the event of a loss) is better than rolling over to the government's commandments. We've all seen that the pace of technology greatly outpaces the speed of the government. We have to assume that by the time some of these legal battles conclude that the basic passage of time will end up ruling in the favor of decentralization.
This is exactly what happened with centralized digital currencies. There were many attempts to create centralized online currencies before Bitcoin came around and they were all slapped down by the man. Now, everyone points to Bitcoin like "See! They're allowed to do it, so can we!" It's pretty funny actually.
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Hey @edicted. Absolutely the pace of technological progress is outpacing the speed which government works. As decentralized exchanges gets more user friendly and it gets easier for anyone to create digital assets, can you imagine the task of trying to keep up.
Imagine tens of thousands of digital assets being created each day all over the world. It is going to make their heads spin.
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