Thomas Daniels
Coinbase has initiated legal action against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) after their denial of Freedom of Information Act (FOIA) requests.
In a lawsuit filed in the U.S. District Court for the District of Columbia, the cryptocurrency exchange, represented by consultancy firm History Associates Inc., alleges that the SEC and FDIC have unfairly rejected its FOIA requests. These requests sought information related to the agencies’ policies and actions regarding cryptocurrency regulation, which Coinbase claims are crucial for understanding the regulatory landscape.
The complaint asserts that both agencies have obstructed efforts to gain clarity on crypto-related policies, thereby violating FOIA obligations, which are designed to provide public access to government records. Coinbase enlisted History Associates in 2023 to obtain documents pertaining to the SEC’s stance on Ethereum and the classification of Ether (ETH). The firm also sought information on cease-and-desist orders issued to Enigma MPC and Etherdelta founder Zachary Coburn.
Following an FDIC report last October advising financial institutions to halt operations related to crypto-assets, Coinbase requested copies of the directive letters. These requests were repeatedly denied, leading Coinbase to pursue legal action. The company claims that the SEC, in particular, has been systematically obstructing access to information, undermining the transparency that FOIA aims to ensure.
An excerpt from the lawsuit states: “The SEC’s rationale for withholding documents from investigations that concluded in settlements years ago is tailor-made to frustrate the legitimate purposes for which Coinbase sought the Coburn and Enigma MPC documents in the first place—to understand the view of the law that underlies the SEC’s enforcement blitzkrieg against the digital asset industry.”
Coinbase vs. SEC: Escalating Tensions
This legal battle adds to the ongoing tensions between Coinbase and the SEC. The crypto exchange has accused the SEC of adopting a “regulation by enforcement” approach, which has been a point of contention in the industry. SEC Chair Gary Gensler has criticized the digital asset sector for prevalent fraud and non-compliance issues.
Coinbase is currently engaged in multiple legal disputes with the SEC. In June, the SEC sued Coinbase for allegedly facilitating unregistered securities trading and operating an unlicensed securities exchange. Additionally, Coinbase’s 2022 rule-making petition is now before the U.S. Court of Appeals for the Third Circuit.
