SEC Denies “Freedom of Information” Right to Public Seeking Info about Cryptocurrency “Tether”

Fears of Money Laundering Allow Tether to Flourish

A news organization through its acclaimed writer, Jacob Silverman, has been denied the right to seek public documents. Under the Freedom of Information Act (FOIA), an application seeking documents relating to cryptocurrency “Tether” was submitted before the Securities & Exchange Commission of the US (SEC), however, the enforcement of the right was curtailed by SEC on the basis that providing of the requested information will jeopardize the ongoing inquiry/investigation.

There is no shortage of stablecoins and their easy accessibility in the market these days. As of today, the total market capital belonging to stablecoins only is above US$ 129.7 Billion. The first ever stablecoin which was developed and launched was “USDT”, also widely known as “Tether”. Out of this massive market cap of US$ 129.7, approximately US$ 70 Billion belongs to Tether only.

In the recent times, one of the acclaimed writer namely Jacob Silverman of The New Republic needed to examine some public documents. Since the documents were in the possession of SEC therefore an official request was required to be made to SEC. In addition, it has to be kept in mind while making the application that the request is sent under the FOIA.

FOIA is a US law that guarantees ‘freedom of information. Any document in the custody of public functionaries/officials can be examined by anyone from the general public. The official/functionary, to whom such a request has been made, is obligated under the law to provide the requested information. However, the enforcement of such right can be curtailed depending on pre-defined grounds.

In the same spirit, Silverman too followed the process prescribed under the law. He demanded from SEC to share with him the documents pertaining to “Tether” – the oldest stablecoin of the world. However, Silverman as well as his news organization have been denied this very right to information.

Initially, Silverman asked SEC to provide data containing internal memos, reports, emails and other ancillary documents connected with Tether and Tether Operations Limited. The information was sought by Silverman on 31st August 2021 and the response of SEC was communicated to him on 22nd September 2021. In SEC’s response, the authority has outrightly denied Silverman the right to examine the records pertaining to Tether and Tether Operations Limited. According to SEC, the authority cannot accept the request because the documents sought for relate to an ongoing investigation. In addition, SEC told Silverman that under Section 7 of FOIA, the authority reserves the right to deny access to documents that are part of an investigation.

It was further responded by SEC that usually there are some investigations which are carried out by SEC on “non-public” basis. Therefore, the law namely FOIA does not apply to such non-public investigations, clarified SEC. However, the crypto community is not pleased and criticized SEC for molding the law to its advantage.