GetBlock Magazine - What happened? American crypto exchange Coinbase (NASDAQ:COIN) filed lawsuits against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) for failure to comply with Freedom of Information Act (FOIA) requirements. The company accused federal regulators of trying to cut off the crypto industry from the banking sector. She expects the court to force them to comply with legal requirements and provide the requested internal documentation.
Source: X.com
What else is known? Under FOIA, the public can petition federal regulators to release all or part of internal records. However, the SEC, as alleged in the lawsuit, rejected such requests from the exchange related to the statute of the native coin of the Ethereum blockchain. The requests were sent on behalf of Coinbase by the consulting firm History Associates, which is also representing it in court.
In particular, officials rejected first the request and then the appeal of Coinbase when it requested documents from the commission regarding the transition of the Ethereum blockchain to the Proof of Stake (PoS) consensus algorithm. Earlier, SEC head Gary Gensler noted that all PoS tokens can be recognized as securities, but this status of ETH has not been officially approved.
The complaint also notes that the SEC refused to provide materials from two already completed investigations related to potential violations of securities laws as a result of the issue and sale of cryptocurrencies. These include cases against encryption startup Enigma MPC and entrepreneur Zachary Coburn with his crypto trading platform Ether Delta.
The materials from these investigations could shed light on the SEC's position regarding ETH, but the commission refused to provide them because it "could prejudice ongoing enforcement proceedings." The cases against Enigma MPC and Coburn were closed back in 2020 and 2018, respectively.
“The SEC is intentionally withholding documents from investigations completed years ago to prevent Coinbase from achieving its legitimate goal: understanding the Commission's rationale for attacking the crypto industry,” the lawsuit states.
In turn, the head of Coinbase, Brian Armstrong, positively assessed the adoption by the House of Representatives of the Financial Innovation and Technology of the 21st Century Act (FIT21), which will transfer some of the powers to regulate the crypto sector to the Commodity Futures Trading Commission (CFTC). The latter is considered a softer regulator compared to the SEC.
