In Washington, D.C., SEC Enforcement Division Fintech Examination Group and Meeting Room, the air outlet of the air conditioner emits a continuous and low hum.
The building's air-conditioning system is so old that it doesn't match its prestigious reputation.
The same noise is made every summer, and the old censors have long since learned to turn a deaf ear to it,
But new analysts get distracted by it every time they have a meeting.
Four printed dossiers were spread out on the conference table, each with a yellow "under review" label on the cover.
These documents have been here since yesterday afternoon, and no one has touched them except the security personnel on duty at night.
The person presiding over the meeting was Peterson, a fifty-four-year-old senior examiner of the review team.
I have worked in the SEC for nearly twenty years and have handled hundreds of fund traceability investigations of offshore funds.
In his career, he has seen too many "funding statements" that were hurriedly supplemented after being investigated and were full of loopholes.
I have also seen a few cases where compliance was truly watertight.
But offshore funds like Era Vanguard, which proactively submit such detailed transaction records to regulatory agencies,
He admitted that it was his first time meeting him.
"Everyone, the attachments to the second round of reply letters from Era Vanguard were all uploaded to EDGAR yesterday afternoon.
I believe everyone here has seen it."
Peterson pushed his reading glasses to his forehead and tapped his fingers on the conference table twice.
"If you haven't seen it, raise your hands now."
No one raised their hands.
There were six people sitting in Meeting Room, except Peterson,
There are also two senior examiners, a Blockchain analysis specialist, and a legal consultant,
And the intern sitting in the corner responsible for recording meeting minutes.
There were at least a hundred printed pages spread out in front of everyone.
Lisa Chen, a legal advisor sitting on the left side of the table, turned to a certain page of a Coinbase institutional account statement.
It densely lists every purchase record in March 2017, with timestamps accurate to the minute.
"More than two hundred pages," she said,
"All are attached with independent index numbers. I have been working at SEC Legal Department for twelve years,
This is the first time I have seen the party under investigation proactively indexing attachments."
"Not the party under investigation." Peterson corrected her,
" is the reporting party that responded to the inquiry.
Theoretically, they are only subjects of review, not subjects of investigation. There is a difference between the two."
"It makes no difference now."
Lisa put down the statement, "They handed over their entire family fortune."
Peterson did not refute.
He picked up the water bottle on the table and unscrewed the cap, moving very slowly.
When he received this reply letter yesterday, he was handling another violation investigation of an offshore fund.
The fund's response letter was only twelve pages long.
The core funding sources were all explained with the words "commercial secrets" and "involving third-party privacy".
He had to send another supplementary inquiry letter,
The other party is required to provide substantive evidence within ten working days, otherwise formal investigation procedures will be initiated.
He has seen this tug of war too many times in SEC Enforcement Division--
The party under investigation put up layers of defenses, including the examiner Step By Step Pressure. The two parties repeatedly pushed back and forth between inquiry letters and response letters one after another.
It can take as short as a few months, or as long as one or two years.
And what Era Vanguard handed over did not require any pulling.
He put the water bottle on the conference table, his voice was low but every word was carefully considered:
"I have been with the SEC for almost twenty years, and most of that time I have been dealing with offshore funds.
You know, it's usually a tug of war between us and the party being investigated --
We asked for disclosure, but they used a lawyer's letter to prevaricate; when we asked again, they kept delaying.
One round, two rounds, three rounds, until we issue a formal subpoena. But Era Vanguard is not."
He patted the file in front of him,
"They took the initiative to hand over all the things we wanted to ask, things we hadn't had time to ask, and things we didn't even think of asking."
Blockchain Analysis Specialist Ramirez sitting in the corner is a young man who has just been employed for two years.
His job is to verify the authenticity of cryptocurrency transaction records on a case-by-case basis.
He said that judging from the query results of the Blockchain browser,
Each transaction hash listed in the attachment can correspond to a real on-chain transfer record.
The timestamp, amount, sender and receiver addresses all match the statement.
This is the first time he has encountered this situation since working at the SEC--
He has handled several cases involving cryptocurrency before,
The party under investigation either claimed that the transaction records were lost or deliberately concealed some transaction details.
No one can list every transaction hash like Era Vanguard for SEC to upload to the chain for verification at any time.
Peterson took off his reading glasses and wiped the lenses.
"The hash value is the easiest to look up.
But did you notice - they also included the batch of paper statements from 2016?
Even the blurred bank stamp on the remittance slip was not corrected."
He paused,
"Coinbase and Bitfinex were very unfriendly to institutional account channels for Asia users in 2016.
Many early users gave up applying for institutional accounts on the platform because they could not pass the institution's compliance review.
Zhao Chen not only applied, but also retained complete bank transfer records from Hong Kong HSBC to Cayman Islands's re-deposit exchange."
"You mean," Lisa turned to the last page of the statement,
"He didn't just complete the compliance procedures after being investigated. He had already kept all the evidence the moment the transaction was completed."
"Sooner than that."
Ramirez interrupted, turning his laptop screen to everyone,
"We found a footnote on the last page of this clearance summary - what do you think it is?
It is a tax withholding memorandum that had been drawn up before the liquidation of Bitcoin occurred, and was hand-signed in November 2017.
In other words, before clearing the warehouse, he had sorted out in advance how to pay taxes and how to enter the capital in compliance with regulations."
Peterson Hold up a copy of this tax memo,
Let the whole Meeting Room see the hand-signed name in the signature column, and then put the paper back on the table.
"He's not like the vast majority of cryptocurrency investors.
As you know, in the Crypto Asset case we handled, almost no early investors would prepare a tax withholding plan in advance.
They usually only find lawyers to make supplementary reports after clearing their positions, or even don't file them at all."
"Also, the timing of Bitcoin's clearance is also interesting."
Peterson Continue, extract a trade-by-trade liquidation schedule from the fourth volume,
"This young man in his 20s accurately pressed the exit button when the market was at its peak, Euphoria.
Traders who have actually seen big tops know very well that the last period of profit is always the most dangerous trap."
The silence in Meeting Room suddenly became deep.
The hum of the air conditioner seemed particularly harsh at this moment.
Each of the six people faced the piles of statements and bank vouchers in front of them, and no one took the initiative to break the silence.
They've all seen too many cases of people trying to get by with regulation --
There are vague explanations of the source of funds, untraceable intermediate accounts, and "trade secrets" used to cover up sensitive issues in the past.
Era Vanguard The weight of these hundreds of pages of attachments is heavier in this room than anywhere else--
Because they are the last people in the world who should not be moved by a document, but they are moved by this document anyway.
Peterson took off his reading glasses, pinched the bridge of his nose, and closed the document in front of him.
"Our job is to treat every response with suspicion.
But now, this suspicion has no object - there are no loopholes, no omissions, and no traces of subsequent verification."
He stacked the files together and pressed his fingers lightly on the cover.
"I recommend that this round of review be completed and the case formally closed."