March 6th, 2025
Litigation Updates: ICAN Wins Continue Building Legal Guardrails to Restrain SEC Overreach
Dear ICAN Partners,
Two months into the new year and the ICAN team is busier than ever, defending the rights of small investors and entrepreneurs and successfully challenging SEC overreach. This week, we are pleased to share another round of exciting updates across our growing portfolio of strategic litigation cases, including two court victories and a new client.
Of course, none of this would be possible without the continued support of each of you, whose support and encouragement allow ICAN to continue to grow our caseload. As you know, each case in our docket has been carefully selected for its potential to establish meaningful restraints that corral the SEC back within its rightful boundaries, protecting market freedom and correcting regulatory imbalances. The more resources available to ICAN, the more cases we can take on. The larger the number of cases, the greater the precedent-based legal bulwark we can build to restrain SEC overreach.
ICAN’s litigation strategy targets four key focus areas: ending disproportionate penalties for technical violations, restoring due process in SEC proceedings, halting jurisdictional overreach, and expanding market access for all investors. The updates below highlight how that strategy is playing out and the real people our efforts are helping.
In gratitude,
Nick Morgan
Founder and President of ICAN
Victory for Our Client as Court Dismisses SEC's Novel "Software Defendants" Theory in PulseChain Case
In a significant win for blockchain technology and digital asset communities, the SEC's claims against Hex, PulseChain, and PulseX have been dismissed, rejecting the unprecedented attempt to name blockchain software programs as defendants. Unlike many cryptocurrency enforcement matters recently dismissed without judicial resolution, this clear ruling creates valuable legal ground that regulatory discretion alone cannot provide.
While the victory stems from the defense team's efforts for Richard Schueler, ICAN played a crucial role as amicus curiae for the PulseChain Foundation with the support of co-counsel Kayvan Sadeghi and Emily Mannheimer at Jenner & Block. Our brief challenged the SEC's novel theory that software programs could be sued as "unincorporated alter ego entities"—a dangerous precedent threatening the entire technology sector.
Our brief argued, "You can't sue the sidewalk or a piece of software," showing how ridiculous and legally unfounded the SEC's approach was.
This dismissal rejects the SEC's aggressive expansion of enforcement authority that would have allowed regulators to target software rather than individuals or entities. It also highlights the SEC's pattern of excluding from litigation the very stakeholders it claims to protect. Despite representing thousands of PulseChain community members, ICAN was limited to amicus status rather than full intervention—a restriction the SEC routinely imposes on affected communities in cryptocurrency and other enforcement actions.
While Judge Bagley has given the SEC 20 days to amend its complaint, this ruling sends a clear message about the limits of the agency's enforcement approach in cryptocurrency regulation.
ICAN Secures Court-Ordered Deadline in Paul Spitzer Case
In a significant victory for due process, we have secured a court-ordered deadline in Mr. Spitzer's case against the SEC. On February 26, 2025, the Ninth Circuit Court of Appeals ordered that the SEC must act on Spitzer's long-pending motion within 120 days or face a renewed petition for a writ of mandamus. This ruling represents a critical breakthrough in our fight against regulatory delays that have kept 74-year-old Spitzer in administrative limbo for over 18 months, depleting his retirement savings and preventing him from supporting himself and his wife despite no finding of fraud or investor harm. (Click the link below to learn more about Mr. Spitzer's case.)
This court order validates ICAN's core argument that federal agencies cannot use administrative silence as a weapon against financial professionals. What began as a technical supervision violation has escalated into an effective lifetime bar through the SEC's refusal to act on Spitzer's motion filed in December 2022. Now, after ICAN's intervention with pro bono partners at Mitchell Silberberg & Knupp, the SEC faces a judicial clock - they must either rule on Spitzer's motion or explain their inaction to the Ninth Circuit. This represents a meaningful step toward ending the pattern of "forever bars" through delay that affects countless financial professionals and serves as a warning to regulatory agencies that courts will not tolerate indefinite administrative purgatory as a punitive tactic.
New Case: JD Jordan and the SEC's Troubling Pursuit of a Careful Investor
ICAN's newest client, JD Jordan, exemplifies how the SEC's enforcement tactics can punish even those who take reasonable steps to comply with securities laws.
Mr. Jordan's case (SEC v Thurlow) involves allegations of technical registration violations—not fraud or intentional misconduct—stemming from transactions where he purchased convertible debt from a private party, which he later converted to common stock and sold on the open market. This case is particularly troubling because Mr. Jordan specifically sought and relied upon a legal opinion letter from an attorney who confirmed these transactions complied with securities laws.
Pursuing enforcement actions against unintentional violations fundamentally fails as a deterrent strategy since individuals cannot be deterred from actions they never intended to commit while simultaneously creating a climate of regulatory uncertainty that chills legitimate market activity. This approach leads market participants to adopt overly cautious strategies that restrict innovation and efficient capital allocation and increase compliance costs as firms and individuals implement excessive safeguards against unknowable risks in the face of complex regulations.
Cases like Mr. Jordan's illuminate why ICAN's 2025 Action Plan calls for reforming these tactics to better align with the SEC's mission and protect market participants from having their lives ruined over an unintentional technical violation.
Educating Future Lawyers: ICAN Discusses Impact of SEC Overreach at MSU
ICAN President Nick Morgan joined CapWealth Founder Tim Pagliara at Michigan State University Law School for an engaging discussion on SEC regulation by enforcement, moderated by Professor Kevin Douglas.
The event provided students with an inside look at the real-world impact of SEC enforcement actions, with Tim sharing his remarkable experience of successfully challenging the SEC in court. Nick emphasized how the SEC's case-by-case litigation approach to policy changes creates significant burdens for small investors and entrepreneurs who lack the resources to fight back.
Support Our Mission: Help ICAN Continue Fighting for Market Freedom
As our litigation efforts expand, your support becomes more critical than ever. Each case we take on represents not just an individual fight for justice but an opportunity to establish precedents that protect market freedom for everyone. With your help, we can:
Provide expert legal representation to small entrepreneurs and investors who would otherwise be steamrolled by the SEC's overwhelming resources
Challenge unfair regulatory practices that stifle innovation and limit economic opportunity
Establish crucial legal precedents that will benefit market participants for generations to come
Expand our network of elite legal partners to increase our impact nationwide
Your tax-deductible donation to ICAN is an investment in a capital markets system that works for everyone—not just the largest players with the deepest pockets. Every contribution, regardless of size, helps us defend those who resist regulatory overreach and promotes a more fair, transparent, and accessible market for all Americans.
If you'd like to discuss other ways to support our mission or learn more about our cases, please contact us at info@icanlaw.org.
Together, we can create change that outlasts election cycles and ensures America's capital markets remain engines of opportunity for all.