The Defi Education Fund, an organization dedicated to expanding the decentralized finance environment, has submitted a Freedom of Information Act (FOIA) request to the U.S. Securities and Exchange Commission (SEC). The documents requested are linked to the SEC’s non-answer to whether syndicated term loan notes constitute securities.

Defi Education Fund Issues FOIA Request for SEC Documents Linked to Kirschner v JPMorgan

The Defi Education Fund, an organization that seeks to achieve regulatory clarity in the decentralized finance space, has submitted a Freedom of Information Act (FOIA) request to the U.S. Securities and Exchange Commission (SEC) regarding its acts on the Kirschner v. JPMorgan case.

In Kirschner v. JPMorgan, the Second Circuit of the United States Court of Appeals ordered the SEC to submit “any views it wishes to share” on considering if syndicated term loan notes could be securities. However, the SEC declined to take sides, stating that it was “not in a position to file a brief on behalf of the Commission in this matter” after asking for two extensions to inquire on the subject.

While some were relieved by the SEC’s answer due to the potentially disruptive effect of its opinions on the resolution of the case and the health of the lending market in the U.S., the Defi Education Fund considered this strange behavior.

Amanda Tuminelli, CLO of the Defi Education Fund, stated:

Why would the SEC want to avoid writing thoughtful analysis on whether something is a security? (said every crypto lawyer ever). Might it be that they are worried about publicly laying out how something *is not* a security?

Crypto-Related Implications

The Defi Education Fund believes that the way the SEC acted (or failed to act) in this case, might be linked to its posture on crypto and the ruling in the SEC v. Ripple case.

According to Tuminelli, who shared the perspective of Bloomberg journalist Adam Levine, if the SEC declared that these loans were not considered securities, it would set a precedent conceding that some investment opportunities are not securities. Also, the commission could be accused of favoritism to big incumbents due to the involvement of JPMorgan in the case.

On the contrary, if the SEC declared these loans were considered securities, this could also be viewed as an overreaching attempt because most loans have not been treated as securities, a position that might spur a conflict with the court’s views.

Tuminelli concluded:

Maybe we get something that evidences what the crypto industry has said for years – the SEC is avoiding taking a concrete public position on ‘securities’ analysis so they can continue to regulate by enforcement.

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