Coinbase Files Lawsuit to Access SEC and FDIC Information

History Associates Inc., a research firm hired by Coinbase, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corp. (FDIC). The complaint accuses the regulators of withholding documents that could clarify their position on cryptocurrencies.

Recent SEC Review and FOIA Exemption

Coinbase argues that the requested documents, which should be accessible under the Freedom of Information Act (FOIA), would provide insight into how regulators view digital assets, including Ethereum’s ether (ETH).

The lawsuit follows the SEC’s recent closure of its review of “Ethereum 2.0,” indicating that there are currently no enforcement issues that would warrant withholding related documents.

Despite this, the SEC invoked FOIA’s “7A exemption” — a provision that protects information that could compromise law enforcement activities — to deny requests for information on the old cases and the recently concluded ETH investigation.

Source: Eleanor Terrett

At the heart of the legal challenge are documents related to three closed cases and advisory communications known as “pause letters.” The letters, allegedly sent by the FDIC’s inspector general to financial institutions, advised them to cease crypto-related activities.

The lawsuit against the FDIC claims these letters represent a broader attempt by financial regulators to insulate digital asset companies from the banking system.

One of the contentious cases involves Zachary Coburn, the founder of EtherDelta, a platform that facilitates the trading of ether. In 2018, the SEC classified the platform’s activities as “digital asset securities.”

Another case involves Enigma MPC, a blockchain startup that raised $45 million in 2017 through the sale of ENG tokens, which the SEC later deemed unregistered securities.

Coinbase Response and Reviews

Coinbase Chief Legal Officer Paul Grewal expressed frustration with the SEC’s lack of transparency in a statement originally posted on X (formerly Twitter).

Grewal criticized the SEC for failing to release documents related to closed investigations that could reveal the extent of its regulatory reach, which Coinbase considers overly broad and illegal.

He noted that those investigations included scrutiny of ETH, which the SEC said was not a security in 2018, as well as other deals going back several years.

The lawsuits are part of a broader series of disputes between Coinbase and U.S. financial regulators, marking an important phase in the ongoing tension between the cryptocurrency exchange and regulators.

Coinbase is notably embroiled in a high-profile lawsuit with the SEC over allegations that it operated an illegal exchange that traded unregistered securities. The case is among the most visible legal battles in the industry and is likely to influence the regulatory landscape for cryptocurrencies in the United States.

History Associates’ lawsuit against the FDIC argues that the letters asking companies to suspend their digital asset activities are part of a concerted effort by the FDIC and other financial regulators to pressure financial institutions to they cut digital asset companies off from the banking system.

Coinbase’s Past Legal Actions

In addition to its Current legal battles, Coinbase has previously funded lawsuits against US government entities. In 2022, Coinbase supported litigation against the US Treasury Department over sanctions imposed on cryptocurrency mixer Tornado Cash.

Although that lawsuit initially failed and resulted in a dismissal by the Federal Court, the plaintiffs have since appealed the decision.

As Coinbase continues its legal proceedings, the outcomes of these cases are expected to play a crucial role in shaping the future regulatory framework for digital assets in the United States, potentially setting important precedents for how cryptocurrencies are treated under the law.

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