Is Code a Form of Free Speech?

The SEC recently charged Zachary Coburn, co-founder of decentralized cryptocurrency exchange EtherDelta, with running an unregistered national securities exchange. He settled and agreed to pay over $300,000. In the cease and desist order issued in connection with the case, the SEC stated that Coburn had violated securities laws because he “wrote and deployed” code that he “should have known” would contribute to EtherDelta’s alleged violations. The Electronic Frontier Foundation has written a letter to the SEC disputing its premise that it can impose liability for the act of writing or distributing code. Such restrictions, the EFF maintains, would fail the well-established test for imposing restraints on speech that courts have found justified only in unusual and extreme circumstances According to the letter, “it is crucial that those engaged in developing protocols, verifying transactions through mining, and writing code are not held liable for operating, or assisting with operating, a securities exchange. Imposing regulatory or criminal liability for such activity would run afoul of the First Amendment.”