SEC Hints at Tether Probe in Records Request Denial

The U.S. regulator cited a law enforcement exemption in denying a Freedom of Information Act request about Tether, though this doesn’t necessarily mean any charges will be filed.

AccessTimeIconSep 24, 2021 at 4:24 p.m. UTC
Updated Sep 24, 2021 at 6:42 p.m. UTC

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

The U.S. Securities and Exchange Commission (SEC) may be investigating Tether and Tether Operations Limited, a Freedom of Information Act (FOIA) request found.

The SEC said it would not release records around Tether because they were collected for enforcement purposes, according to a FOIA response the SEC sent to The New Republic staff writer Jacob Silverman.

“We are withholding records that may be responsive to your request under 5 U.S.C. § 552(b)(7)(A). This exemption protects from disclosure records compiled for law enforcement purposes, the release of which could reasonably be expected to interfere with enforcement activities,” the response said.

The SEC response also said the withholding of records for the law enforcement exemption does not necessarily mean any charges or enforcement actions will be brought.

In a statement from an external spokesperson, Tether said, “We constantly work with regulators and law enforcement around the world and we collaborate on many aspects regarding the broader digital asset industry. We therefore caution anyone from jumping to false conclusions about matters related to Tether.”

SIlverman’s original request, filed on Aug. 31, 2021, asked for “all documents, emails, memos and reports” that mentioned or otherwise dealt with Tether and Tether Operations Limited.

He told CoinDesk he was “pretty suspicious” about Tether, leading to his filing multiple FOIA requests with the SEC (one for each entity name).

“Like a lot of people I’m researching the space, and like a lot of people I was curious [about] what is the deal with Tether and the various controversies,” he said.

Any SEC investigation would have to have started recently. According to Bennett Tomlin, a data scientist, a similar FOIA request filed in February and returned in July found the SEC did not “locate or identify any information responsive to your request.”

The SEC is not the only agency to have refused FOIA requests involving Tether. The Commodity Futures Trading Commission (CFTC) refused a similar request in 2018 about subpoenas issued to the company on similar grounds.

Tether is also fighting an open records request in the New York state courts. CoinDesk filed a Freedom of Information Law (FOIL) request for information about Tether’s reserves earlier this summer.

The company pushed back at the end of August, arguing that some of the information that would be published should remain confidential due to concerns about competition with other stablecoins.

“Tether’s competitive advantage, and the area of highest competition between stablecoin platforms, lies not in the operational features of the tether token itself but rather in the liquidity of the tokens in the marketplace, Tether’s presence on multiple blockchains, and the stability, reliability, and profitability of Tether as an entity,” Tether’s petition said.

UPDATE (Sept. 24, 2021, 18:40 UTC): Adds FOIA response received by Bennett Tomlin, adds Tether statement.

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Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

CoinDesk - Unknown

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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