US District Court Enforces Subpoena for LGBCoin Investigation
Commentary by Steven Lofchie
The SEC reported that the US District Court for the Southern District of Texas granted the SEC's application to enforce a subpoena for the production of documents in connection with its efforts to determine if crypto asset "LGBCoin," (aka "Let's Go Brandon Coin") is a security.
In a Litigation Release, the SEC reported that it is investigating the offer and sale of LGBCoin for the purposes of determining whether LGBCoin was offered and sold as a security to determine whether federal securities laws were violated. According to the Release, the individual filed a petition to quash "arguing that the SEC lacked jurisdiction because LGBCoin is not a security." The SEC stated that it cross petitioned for an Order demanding "obedience" with the subpoena.
On May 23, 2024, the Court ordered the individual to comply with the subpoena and authorized the SEC to investigate. According to the SEC, it "has not concluded that any individual or entity has violated federal securities law(s)."
Commentary
Coinbase reports the current market capitalization of the LGBCoin as $0. CoinMarket Cap has the LGBCoin trading volume at just over $23,000 a day. The Discord page on the coin has 31 members. The Let's Go Brandon! Coin website does not suggest that purchasers will make money. In fact, the site contains the following message in fairly large letters: "Let's Go Brandon has no intrinsic value and you should not purchase it with any expectation that you will be able to resell it. Please do not spend money that you cannot afford."
Why is the SEC investigating this? It cannot possibly be a good use of resources, unless the SEC's goal is to issue a statement explaining why the LGBCoin is not a security, so that a body of law may be developed around permissible cryptocurrencies. That seems unlikely.
Of course, this may help explain the SEC's need for a budget increase (See, SEC and CFTC Chairs Request Substantial Budget Increases.)