Coinbase Seeks SEC Documents in Legal Battle

Crypto exchange Coinbase is requesting a court ruling to obtain documents from the U.S. Securities and Exchange Commission (SEC) regarding the application of securities laws to cryptocurrency.

On Tuesday, Coinbase, via the consulting firm History Associates Inc., filed a request with the U.S. District Court for the District of Columbia to seek a motion for partial summary judgment. This move follows Coinbase's lawsuit against the SEC and the Federal Deposit Insurance Corporation (FDIC) from June, aimed at enforcing its Freedom of Information Act (FOIA) request. FOIA allows the public to seek records from federal agencies.

Coinbase aims to retrieve both external and internal communications concerning the SEC's investigations into whether ether is classified as a security, a critical issue for the industry.

The blockchain software firm Consensys highlighted this issue in a lawsuit against the SEC in April, mentioning that the former SEC Division of Enforcement Director, Gurbir Grewal, approved an investigation into "Ethereum 2.0" in March 2023. This investigation targeted individuals and entities trading in ether. However, the SEC later claimed that it was closing its investigation.

The SEC has pursued multiple enforcement actions against cryptocurrency platforms in the past year, including a separate lawsuit against Coinbase for allegedly operating without proper registration.

Despite Coinbase's requests, the SEC has been resistant to produce the requested documents, initially claiming exemption from FOIA but later reconsidering this position according to Coinbase's Chief Legal Officer, Paul Grewal.

The SEC now asserts that it will take three years to produce the documents sought by Coinbase, as indicated in Tuesday's filing.

History Associates stated in its complaint, "Instead of promptly producing responsive documents, the SEC insists it must start over and re-review the documents for other withholding reasons that it apparently never considered—and it will not even begin that repeat review for three years."

Coinbase also sought documents on two concluded investigations involving Zachary Coburn and Enigma MPC. Enigma MPC, a data encryption startup, settled with the SEC in 2020 after the agency determined its tokens were securities. Coburn's platform, Ether Delta, was also classified as an exchange by the SEC, leading to a settlement in 2018.

The next step involves a judge determining whether Coinbase can move forward with the partial summary judgment motion. The SEC will provide its response, and if permitted, Coinbase would be surprised if a ruling were issued before the year's end.

Additionally, Coinbase and History Associates sent FOIA requests to the FDIC related to the agency's "pause letters." These letters were issued between March 2022 and May 2023, instructing financial institutions to refrain from expanding crypto-related activities.

A SEC spokesperson stated that the agency would not comment beyond its public filings.

Update: Oct. 15, 5:40 p.m. UTC – SEC declined further comments.