NEW YORK (Reuters) – A top U.S. securities regulator says it cannot release documents related to the cryptocurrency project Tezos because doing so could interfere with an investigation or enforcement activities, according to a document seen by Reuters on Friday.
In a letter dated Tuesday, the U.S. Securities and Exchange Commission denied a public information request from a lawyer representing class-action plaintiffs who say they were defrauded by Tezos’ $232 million fundraiser in July.
The SEC letter said an exemption allows it to withhold records if their release might “interfere with enforcement activities.” But it added that use of the provision should not be taken to mean any legal violations had occurred.
The letter does not say that Tezos itself is under investigation. The class-action lawyer, David Silver, provided the document to Reuters. A spokesman for the Tezos project’s founders did not immediately respond to a request for comment. The SEC declined to comment.
Tezos raised money in a “initial coin offering,” a type of online fundraiser where a new cryptocurrency is issued to contributors. While the Tezos ICO remains one of the largest by amount raised, contributors have yet to receive the tokens because the project has been derailed by infighting between its promoters.
The battle pits the project’s founders, Kathleen and Arthur Breitman, against Johann Gevers, the president of a Swiss foundation that was set up to conduct the ICO. The Zug-based Tezos Foundation controls the funds, while the Breitmans control the project’s computer code.
A spokesman for the foundation did not immediately respond to requests for comment.
Reuters detailed the battle in an investigation in October. Since then several class-action lawsuits have been filed in the United States against the project’s organizers alleging that the fundraiser violated federal securities laws and defrauded investors.
The Tezos fundraiser was structured as a donation, though some contributors believed it was an investment.
If deemed a donation and not a security, the funds raised might not fall under the remit of the SEC.
The SEC has been studying ICOs and issued an investor bulletin in July that warned that some cryptocurrencies issued in ICOs may be considered securities.
“To the extent that digital assets like ICOs are securities – and I believe every ICO I’ve seen is a security – we have jurisdiction and our federal securities laws apply,” SEC Chairman Jay Clayton said at a Senate Banking Committee hearing on Tuesday. “We will enforce these laws.”
Reuters made a public records request to the SEC for documents related to Tezos in November. On Dec. 12 the SEC responded by saying it had conducted a search but had not found any such documents.
Reporting by Anna Irrera; Editing by Lauren Tara LaCapra and Cynthia Osterman