Coinbase, a leading cryptocurrency exchange, is taking legal action against the US Securities and Exchange Commission (SEC) in an effort to gain access to internal documents that could provide insight into the regulator’s enforcement strategy towards the crypto industry. The lawsuit stems from the SEC’s denial of requests made under the Freedom of Information Act (FOIA) by History Associates, a firm hired by Coinbase to clarify the agency’s stance on digital assets.
Initially, the SEC withheld documents citing FOIA Exemption 7(A), which protects records related to law enforcement proceedings. However, the regulator later admitted that this exemption may no longer be applicable but still insisted on delaying the review of documents for three years. Coinbase believes that these delays are unwarranted and has filed a motion for partial summary judgment in an attempt to expedite the process.
The SEC’s delays in producing documents have led Coinbase to propose a two-track approach, prioritizing the review of internal SEC communications while addressing third-party records at a later date. The goal of this legal action is to gain clarity on how the SEC applies securities laws to crypto companies, as there are currently no clear rules defining which tokens could be considered securities.
History Associates initially filed FOIA requests in 2023 seeking clarification on Ethereum’s transition to a proof-of-stake blockchain and documents related to the SEC’s case against Zachary Coburn, the founder of EtherDelta. Coburn was charged in 2018 with operating an unregistered national securities exchange, marking the SEC’s first enforcement action of this kind. The charges were ultimately settled with Coburn paying nearly $400,000 in disgorgement and penalties.
This lawsuit is part of Coinbase’s broader efforts to challenge the SEC’s regulatory approach, which many in the industry view as an overreach of authority. By seeking access to internal documents, Coinbase hopes to gain a better understanding of the SEC’s enforcement strategy and potentially influence future regulatory decisions in the cryptocurrency space.