Coinbase Accuses U.S. SEC, FDIC of Improperly Blocking Document Requests

A research firm Coinbase contracted is suing the U.S. Securities and Exchange Commission (SEC) and a federal banking agency, accusing them on Thursday of failing to produce documents under open-records laws that would shed light on the regulators’ views on cryptocurrencies.

On behalf of the U.S. digital assets exchange, History Associates Inc. said it’s been improperly rebuffed by the SEC and the Federal Deposit Insurance Corp. regarding documents that Coinbase contends should be available under the Freedom of Information Act (FOIA). At the SEC, Coinbase is seeking written communications in three closed cases for how the agency formally worked out what digital assets it thinks qualify as securities, including Ethereum’s ether (ETH). And at the FDIC, the exchange wants copies of the so-called “pause letters” the agency’s inspector general said were sent to financial firms advising that they slam the brakes on crypto activity.

Coinbase’s representatives are swooping in with this legal challenge right on the heels of the SEC’s indication that it’s reportedly closed its review of “Ethereum 2.0” as a potential security, so the regulatory agency may have greater difficulty rejecting document requests based on ether being at the center of an ongoing enforcement matter.

The exchange is also seeking documents tied to two previously settled digital assets cases. One involves Zachary Coburn, who founded the EtherDelta platform that acted as a market for ether that the SEC deemed in a 2018 action to be “digital asset securities,” and the other focused on Enigma MPC, a blockchain startup that in 2017 sold $45 million in ENG tokens that the SEC ruled were unregistered securities.

“We asked the SEC for documents about closed investigations to shed light on how the SEC views its newfound, sweeping (and unlawful) authority,” Coinbase Chief Legal Officer Paul Grewal said in a post on X (formerly Twitter). “One of those investigations, which only recently closed, focused on ETH, which the SEC publicly announced is not a security in 2018. And the other investigations have been closed for years. But the SEC stonewalled our requests.”

The SEC has denied requests for information on those long-closed cases and the more recent ETH matter under FOIA’s “exemption 7A” – the protection against revealing matters that could undermine its law enforcement efforts.

Spokespeople for the SEC and FDIC declined to comment on the lawsuits.

History Associates’ suit against the FDIC argues the letters asking firms to pause digital assets business “are part of a deliberate and concerted effort by the FDIC and other financial regulators to pressure financial institutions into cutting off digital-asset firms from the banking system.”

The lawsuits join a host of other legal clashes between Coinbase and U.S. financial regulators. It’s currently in a fight with the SEC over the agency’s accusations that it operates an illegal exchange that trades unregistered securities is among the industry’s highest profile court battles that could ultimately determine the course of crypto in the U.S. Coinbase also sued the SEC seeking a court order that would force the regulator to issue guidance defining digital asset securities.

Coinbase has funded lawsuits against U.S. government entities before. In 2022 it backed a group of investors and developers – including some of its own employees – who sued the U.S. Treasury Department over its sanctions against crypto mixer Tornado Cash. That suit was ultimately unsuccessful in a federal court, though the plaintiffs appealed.

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