Coinbase pushes for court intervention to obtain SEC documents on crypto regulations

• Coinbase seeks SEC documents on crypto regulations through a court ruling.
• The focus is on Ether’s security status and past closed investigations.
• SEC delays document release, citing a three-year review process.

Coinbase, a leading US cryptocurrency exchange, has intensified its legal efforts to access crucial documents from the US Securities and Exchange Commission (SEC).

The crypto exchange has asked the US District Court for the District of Columbia for permission to file a motion for partial summary judgment, seeking clarity on how securities laws apply to cryptocurrencies.

The move follows a Freedom of Information Act (FOIA) lawsuit filed in June against both the SEC and the Federal Deposit Insurance Corporation (FDIC).

Probing what the SEC has on crypto

The requested documents involve internal and external communications concerning the SEC’s investigations into whether specific digital assets, particularly Ether, should be classified as securities.

The classification of Ether (ETH) remains a contentious issue within the industry, with significant implications for the regulatory landscape.

This debate resurfaced when Consensys, a blockchain software firm, filed a lawsuit against the SEC in April, challenging an investigation into “Ethereum 2.0.” The investigation aimed to scrutinize activities involving ether trading, though it was subsequently closed.

Coinbase’s FOIA request also seeks records regarding two completed SEC investigations. One case involved the 2020 settlement with Enigma MPC, a data encryption startup accused of issuing unregistered securities.

The other case concerned Ether Delta, a trading platform established by Zachary Coburn, who reached a settlement with the SEC in 2018 after the platform was deemed to be operating as an unregistered exchange.

Speculation about the SEC concealing discrepancies

Coinbase alleges that the SEC has been uncooperative, first claiming FOIA exemptions and more recently suggesting it would need three years to review the documents. This timeline has been criticized by Coinbase and its consultant, History Associates Inc., for causing undue delays.

The SEC’s reluctance to release documents has fueled speculation about potential discrepancies in how it applies regulatory standards to different entities and projects.

Additionally, Coinbase’s FOIA requests target the FDIC’s “pause letters,” which were issued to financial institutions from March 2022 to May 2023, urging them to halt the expansion of crypto-related activities. The FDIC’s Office of Inspector General had noted these letters in a 2023 report, raising questions about possible coordinated regulatory pressure on the crypto industry, informally dubbed “Operation Choke Point 2.0.”

A judge’s decision on whether Coinbase can proceed with the motion is expected soon, with a ruling potentially coming by year’s end.