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Coinbase is heading back to court against U.S. regulators and wrangling over Freedom of Information Act (FOIA) requests. A US crypto exchange is trying to obtain documents showing how the initial decisions were made at the Securities and Exchange Commission (SEC) on which digital tokens would be considered securities.
The company’s subcontractor, History Associates, is also suing the Federal Deposit Insurance Corporation (FDIC) over letters sent to financial firms urging them to halt crypto activities.
History Associates Inc., on behalf of Coinbase, stated that documents that should have been accessible under FOIA were wrongfully denied by the SEC and FDIC. Requesting written communications from the SEC regarding three closed cases in which the agency considers digital assets as securities, Coinbase is asking the FDIC for “cease and desist letters” from the agency’s inspector advising financial firms to cease their crypto activities.
Coinbase‘s legal challenge comes on the heels of the SEC saying it has closed its review of “Ethereum 2.0” as a potential security, so it may be harder for the regulatory agency to deny document requests.
The exchange is also seeking documents related to two previously resolved digital asset cases. One involves Zachary Coburn, who founded the EtherDelta platform, which the SEC ruled were “digital asset securities” in 2018, and the other involves Enigma MPC, which sold $45 million worth of ENG tokens in 2017, which the SEC ruled were unregistered securities.
“We requested documents related to closed investigations to shed light on how the SEC views its new, sweeping (and illegal) authority,” Coinbase Chief Legal Officer Paul Grewal said in a statement on X (formerly Twitter). “One of these investigations focused on ETH, which only recently closed and the SEC publicly declared not a security in 2018. Other investigations have been closed for years. But the SEC blocked our requests.” The SEC denied requests for information about long-closed cases and the more recent ETH matter under FOIA “exception 7A” – protection from uncovering matters that could undermine law enforcement efforts. Spokespeople for the SEC and FDIC declined to comment on the cases.
History Associates’ lawsuit against the FDIC argues that letters to firms asking them to cease digital asset business are “part of an effort by the FDIC and other financial regulators to pressure financial institutions to cut off digital asset firms from the banking system.”
These lawsuits join other legal clashes between Coinbase and U.S. financial regulators. The current case with the SEC over allegations that the agency operates an illegal exchange that trades unregistered securities is one of the most high-profile court battles that could determine the crypto industry’s future in the United States. Coinbase also sued the SEC, seeking a court order that would force the regulator to issue guidance defining digital asset securities.
Coinbase has previously funded lawsuits against the US government. In 2022, it backed a group of investors and developers — including some of its employees — who sued the U.S. Treasury Department over sanctions against the Tornado Cash crypto mixer. That lawsuit failed in federal court, but the plaintiffs appealed.
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