The DeFi Education Fund used the Freedom of Information Act (FOIA) to get more information about the Securities and Exchange Commission’s decision not to clarify whether syndicated loans are securities.
DeFi Education Fund submits a FOIA request for SEC records
BlockWorks published a report stating that the DeFi Education Fund (DEF) is asking for additional information from the SEC. The request is related to the SEC’s decision not to clarify whether syndicated loans should be classified as securities during a securities law dispute. In March 2023, the Second Circuit Court of Appeals in the United States requested the SEC’s opinion on the case of Kirschner v. JPMorgan Chase Bank, N.A. This case is about how to classify syndicated loans. However, according to Binance, the SEC refused to submit an amicus brief in the case, citing its inability to intervene in the matter.
Some people felt relieved by the SEC’s response, as they believed the agency’s opinions could have a disruptive impact on the case and the lending market in the U.S. However, the DeFi Education Fund found the SEC’s behavior to be unusual.
Implications Having to Do with Cryptocurrency
The DeFi Education Fund suspects that the SEC’s actions or inactions, in this case, may be connected to its stance on cryptocurrencies and its judgment in the SEC v. Ripple case.
Amanda Tuminelli, the DEF’s chief legal officer, expressed worries about the SEC’s decision, especially considering their tendency to classify crypto tokens as securities. She shared the viewpoint of Bloomberg journalist Adam Levine, who argued that if the SEC ruled that these loans were not securities, it would establish a precedent acknowledging that certain investment opportunities are not considered securities.
If the appeals court decides that syndicated loans are securities, it could pose a serious threat to the entire industry. The SEC may face allegations of bias against large, established players because of JPMorgan’s involvement in the case.