In July, The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission fined the Abra app for trading synthetic assets.
At the time, that seemed like the end of it. In response to Cointelegraph’s request for details under the Freedom of Information Act (FOIA) in the Abra case, the SEC cited the US. 552 (b) (7) (A) of the FOIA, an exception that only applies to ongoing investigations. The exception applies to situations where disclosure of information is possible “They are reasonably expected to disrupt law enforcement processes.”
The Securities and Exchange Commission’s response does not provide details of the ongoing investigation and has stated very carefully that it does not mean that the Commission has not yet blamed Abra: “The statement of this exemption should not be construed as an indication by the Commission or its staff that there has been a breach of the law in relation to any person, organization or safety.”
What exactly the SEC is investigating remains an uncertain question, but it should potentially be worth something in another case. A representative from the Commission’s FOIA office informed Cointelegraph “There may be problems they try to resolve before they complete the general investigation.” a vague language characteristic of an organization which, for political reasons, does not speak about its investigations until they are completed.
The original fines on Abra were relatively minor at only $ 300,000. However, a strong message was sent regarding the jurisdiction of the SEC. Abra has offices in California and the Philippines. The service ordered by the SEC and the CFTC was not what the company offered to its US users. Rather, it was a way of synthetically replicating price movements in US stock markets for non-US retail investors. There have been arguments that both commissions’ mission to protect American investors would be incorrect.
The SEC and the CFTC disagreed and moved on. The principle of operation seems to be that any connection to the United States is sufficient for the United States’ regulatory infrastructure to restrict objectionable offers. Similar questions about jurisdiction arose during SEC prosecuting Telegram for selling its GRAM tokens.
Abra did not respond to Cointelegraph’s request for further details at the time this story was published.
In August, SEC Commissioner Hester Peirce, told Cointelegraph about the Abra case and the SEC jurisdiction that “It helps when we can be as clear as possible about when our laws apply and when they don’t. It’s just that the world is a chaotic place.”