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The “Let’sGoBrandon.com” meme coin started as a joke based on a 2021 Halloween costume – a joke that soared from zero to more than $570 million at its peak a couple of months later. Immediately, LetsGoBrandon.com coin became more than a parody – it is a symbol of free speech against the censorship and de-platforming of social media and a means to support charities. It was a viral sensation until NASCAR publicly revoked its formally approved on-track sponsorship of the original Brandon [Brown]'s car causing $390 million of losses to coinholders in a single day. NASCAR cited undefined “political guidelines” for its decision.

The coin was never a security or part of an investment contract. Congress limited the SEC’s jurisdiction to securities. Nevertheless, the coin has attracted the attention of the SEC and it has opened an investigation.

Astoundingly, the SEC has explicitly refused in open court to even allege that the coin is a security, flippantly stating that it is an “argument for another day.” That said, the SEC is plowing forward with its dragnet investigation issuing subpoenas to a plethora of parties, including several prominent political figures.

In the face of the SEC’s attempt to claim limitless jurisdiction and not be confined to its statutory “securities” authority, Mr. Koutoulas recently filed a lawsuit against the SEC in a Miami federal court to quash its subpoena. (See Koutoulas v. SEC, Motion to Quash). Accordingly, these legal and constitutional arguments have been supported by the Supreme Court in three recent decisions restraining the overreach of the administrative state. Among them, the Court has enforced the Major Questions Doctrine which says agencies cannot usurp jurisdiction over questions of major economic or political significance without explicit congressional authority; and, here, no such congressional authority exists.

This suit will likely be the seminal case on this singular issue: whether the SEC can investigate anything under the sun, without even claiming that a security is remotely involved. This is the Department of Education investigating an oil spill in the Gulf of Mexico...then adjourning “argument for another day” that the oil spill is a college student.

Since filing suit, a Southern District of New York judge held in SEC v. Ripple Labs that, “XRP as a digital token, is not in and of itself a ‘contract, transaction[,] or scheme’ that embodies the Howey requirements of an investment contract” and, therefore, is not a security. As a meme coin, LetsGoBrandon.com coin has never been used as anything other than a functionless digital collectible to support First Amendment-protected free speech. The coin’s DeFi community was never solicited to invest in a business or to build a technology protocol or network. Hundreds, if not thousands, of community members have made efforts on behalf of the project. The Ripple court ruling confirms that LetsGoBrandon.com coin is not a security, hence the SEC’s refusal to even allege in court that the coin is a security.

We must question the SEC’s motives in investigating the coin. Does it mean to harass our DeFi community as part of its war on crypto which has destroyed hundreds of billions of wealth in the name of “investor protection?” Is it to distract from the SEC letting the FTX fox in the henhouse before FTX was alleged to have commingled $9 billion in customer funds? Or, is it to harass political opponents like the administration was found to have done by de-platforming social media users critical of it in Missouri v. Biden (currently stayed pending appeal)? In this case, notably, the SEC did not request any documents about NASCAR.

Since taking the SEC helm in 2021, Chairman Gensler has punished digital-asset firms for, paradoxically, violating law and regulations that do not exist. Chairman Gensler importuned Congress to give the SEC authority to regulate crypto in his April 2021 Congressional testimony. Meanwhile, Congress has been doing just that: both houses of Congress have drafted cryptocurrency bills and are holding hearings. As a matter of constitutional comity, Chairman Gensler must defer to his own request and stand down. For its part, Congress should assert its constitutional prerogative by filing amicus briefs in SEC-related cryptocurrency cases requesting that the SEC stands down until Congress completes its legislative process, and then the SEC begins its own rulemaking process thereafter.

Eyes will soon descend upon a federal court in Miami which has been asked to decide whether the SEC’s gross overreach shall be allowed to continue destroying American businesses and livelihoods within a hugely important nascent and global industry. Hopefully, this crypto-equivalent of the Department of Education investigating whether an “oil spill is a college student” shall not be allowed to pass and LetsGoBrandom.com coin will be successful in its mission of standing up for free speech.

James L. Koutoulas is a multi-strategy hedge fund manager and investor protection attorney who represented 38,000 MF Global customers pro bono in its bankruptcy.

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