SEC v PulseChain

Can the SEC Sue a Piece of Software?

Can the SEC sue a piece of software? That question is at the heart of SEC v Schueler, a case which illuminates the alarmingly capricious way the SEC continues to expand and wield its unrestrained regulatory powers. In SEC v Schueler, the SEC has named as party defendants a blockchain token, a blockchain network, and a protocol deployed on a blockchain network – all software! With the assistance of the ICAN Legal Network, we are empowering PulseChain Foundation to stand up to the SEC’s unprecedented attempt to extend its already expansive approach to crypto enforcement, giving a voice to the community that is built upon the software in question. In the process, ICAN is ensuring that the SEC’s gross overreach of regulatory authority does not go unnoted and unchallenged, as do so many of its actions.

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"You can’t sue the sidewalk, or a piece of software.  This case marks an unprecedented departure from the SEC’s already-expansive approach to crypto enforcement actions, by naming as defendants a blockchain token, a blockchain network, and a protocol deployed on a blockchain network. All three are software." - A quote from ICAN's Amicus Brief

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Providing Pro Bono Counsel to the PulseChain Foundation

In recent years, the SEC has employed increasingly creative methods in an attempt to extend the regulatory agency’s control over the burgeoning digital asset space. But even in an environment of SEC overreach that increasingly strains credulity, SEC v Scheler stands out. In addition to naming one human defendant, the SEC has named three software products as co-defendants in the case.

The absurdity might be humorous if the stakes weren’t so high. In insisting that even lines of code are not outside their punitive regulatory reach, the SEC is further highlighting the degree to which the government agency is reigning unchecked, often out of sight of public or legal scrutiny.

In taking on the nonprofit PulseChain Foundation as a client and filing on their behalf an amicus brief in SEC v Schueler, ICAN is once again publicly challenging the SEC’s overreach and illuminating the far-reaching, stultifying effects of that overreach. 

PulseChain Foundation represents one of the world’s most vibrant blockchain communities, a community made possible by the software under attack in the case. In filing the PulseChain Foundation’s amicus brief, ICAN is giving voice to the tens of thousands of business owners, artists, content creators, thought leaders, and other innovators across the globe who have flocked to PulseChain’s blockchain ecosystem as a space to build, to create, to do business, and express themselves free of censorship or the threat of repercussions.

If the SEC is successful, it could have a chilling effect on this leading edge of innovation and free expression.

“If [the SEC is] going to call into question PulseChain, what’s next?” asked a PulseChain Foundation board member on a recent ICAN SEC Roundup.  

Along with its Legal Network partners, ICAN seeks to bring to light the absurdity of the SEC’s effort and the far-reaching impacts. 

Without ICAN’s engagement, the voice of the PulseChain community would not have been heard by the court.  For obvious reasons, the software named as defendants by the SEC are not represented by counsel, and the harmful impact the SEC’s case will have on the users of that software would not have been brought to the judge’s attention.

When it comes to creating a bulwark to restrain the SEC, stakeholders in the economy must make their voices heard with legal representation for any change to be made. While not every defendant or non-party fighting back will need ICAN’s representation, filing amicus briefs, with the support of our Legal Network, is a crucial part of our strategy.