- Coinbase seeks SEC documents on cryptocurrency regulation through court ruling.
- The focus is on Ether’s security status and past private investigations.
- The SEC delayed release of the documents, citing a three-year review process.
Leading US cryptocurrency exchange Coinbase has stepped up its legal efforts to gain access to sensitive documents from the US Securities and Exchange Commission (SEC).
The cryptocurrency exchange has requested permission to file a motion for partial summary judgment in the U.S. District Court for the District of Columbia, seeking clarity on how securities laws apply to cryptocurrencies.
This action follows a Freedom of Information Act (FOIA) lawsuit filed against the SEC and the Federal Deposit Insurance Corporation (FDIC) in June.
Investigating What the SEC Has on Cryptocurrencies
The requested documents include internal and external communications related to the SEC’s investigation into whether certain digital assets, particularly Ether, should be classified as securities.
The classification of Ethereum (ETH) remains a controversial issue within the industry and has significant implications for the regulatory environment.
The debate resurfaced in April when blockchain software company Consensys filed a lawsuit against the SEC challenging its investigation into “Ethereum 2.0.” The investigation was aimed at scrutinizing activities related to Ether transactions, but has since been closed.
Coinbase’s FOIA request also seeks records regarding two completed SEC investigations. One case involves a 2020 settlement with Enigma MPC, a data encryption startup accused of issuing unregistered securities.
Another case involves Ether Delta, a trading platform founded by Zachary Coburn, which reached a settlement with the SEC in 2018 after it was deemed to be operating as an unregistered exchange.
Speculation that the SEC is covering up the discrepancies
Coinbase claims the SEC has been uncooperative, first insisting on FOIA exemption and more recently suggesting it would take three years to review the documents. This timeline has been criticized by Coinbase and consultant History Associates Inc. for causing excessive delays.
The SEC’s reluctance to release the documents has sparked speculation that there may be potential inconsistencies in how regulatory standards are applied to various agencies and projects.
Additionally, Coinbase’s FOIA request targets the FDIC’s “cease and desist letters” issued to financial institutions from March 2022 to May 2023, urging them to halt the expansion of cryptocurrency-related activities. The FDIC’s Office of the Inspector General mentioned these letters in a 2023 report, raising questions about the possibility of coordinated regulatory pressure on the cryptocurrency industry, informally dubbed “Operation Choke Point 2.0.”
A judge’s decision on whether Coinbase can proceed with this application is expected soon, with a ruling likely by the end of the year.