Coinbase and History Associates Inc. have initiated a lawsuit against the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC), alleging non-compliance with the Freedom of Information Act (FOIA) requirements.
In 2023, Coinbase engaged History Associates Inc. to obtain records from the SEC and FDIC. However, these requests were denied, prompting History Associates to now sue both agencies to compel the release of the documents.
In the lawsuit, History Associates serves as the plaintiff, with Coinbase listed as an interested party. According to the complaint, History Associates, on behalf of Coinbase, filed a FOIA request with the SEC in July 2023, seeking documents regarding the SEC’s views on Ethereum (ETH) and its legal status. The SEC rejected this request in October 2023, claiming it could not locate or identify any relevant information.
After History Associates appealed, the SEC acknowledged the existence of these documents but claimed they were protected by exemption rules. History Associates and Coinbase argue that these exemptions do not apply and that the court should require the SEC to disclose this information.
Regarding the FOIA request to the FDIC, Coinbase and History Associates sought investigation documents involving Enigma MPC and EtherDelta founder Zachary Coburn, both of whom were issued cease-and-desist orders for alleged securities violations. The complaint states, “The SEC has kept the files of investigations closed for years confidential, with the rationale of thwarting Coinbase’s legitimate demand for these files to understand the legal basis for the SEC’s enforcement in the digital asset industry.”
In November 2023, History Associates also filed a FOIA request on behalf of Coinbase with the FDIC, seeking copies of all so-called ‘cease letters,’ which instruct regulated financial institutions to ‘suspend all activities related to crypto assets.’ The FDIC’s Inspector General’s office confirmed the existence of these letters in an October 2023 report. However, the FDIC again refused the FOIA requests in January 2024 and the previous month, leading History Associates to appeal, accusing the FDIC of violating federal disclosure regulations and demanding the court force the FDIC to submit these documents.
Coinbase is now engaged in three separate legal battles with the SEC. After the SEC rejected its formal rule-making request in 2022, Coinbase sued the agency. This case is currently proceeding in the United States Third Circuit Court of Appeals. The SEC sued Coinbase in June 2023, accusing it of securities violations. Coinbase has largely failed to dismiss the lawsuit, which has now entered the evidence discovery phase.
Paul Grewal, Coinbase’s Chief Legal Officer, expressed dissatisfaction with the regulatory agencies’ approach in a post on X, emphasizing the importance of government operational transparency and clear regulatory requirements for the digital asset industry. Grewal stressed, “Transparent government operations and clear regulatory requirements are crucial for the healthy development of the digital asset industry.”
The legal disputes with Coinbase highlight the coordinated attempt by the SEC and FDIC to cut digital asset companies off from basic banking services. This effort, dubbed ‘Operation Chokepoint 2.0,’ describes the financial regulatory agencies’ systematic efforts to restrict crypto businesses from accessing essential banking services.
History Associates pointed out in legal documents that various federal financial regulatory agencies, including the SEC, FDIC, and the Federal Reserve, have been using all their regulatory tools to weaken the digital asset industry over the past two years. This FOIA lawsuit aims to reveal the FDIC’s role in this unlawful action. Coinbase believes that refusing to share files from completed investigations is a deliberate obstruction to understanding the legal framework upon which these agencies base their enforcement activities.
This lawsuit reflects Coinbase’s ongoing struggle with U.S. regulatory agencies and the broader debate on how to regulate digital assets. Coinbase hopes to promote regulatory transparency through legal means, ensuring the healthy development of the digital asset industry within a lawful framework.
This article is a collaborative reproduction from:
Crypto City
