Why Coinbase Is Suing the SEC and FDIC Over Public Records

Publicly traded crypto exchange Coinbase, in connection with History Associates Incorporated, has filed two civil lawsuits against the Securities and Exchange Commission and Federal Deposit Insurance Corporation for their failure to comply with FOIA requests.

The Freedom of Information Act, or FOIA, grants the full or partial disclosure of previously unreleased information that's controlled by the U.S. government. Generally speaking, agencies have 20 days to respond—not necessarily satisfy—these requests. And even when government agencies do furnish documents, they can redact anything that falls under certain exemptions: information related to national security, internal personnel, trade secrets, law enforcement, or financial institution records.

Late last year, Coinbase hired History Associates Incorporated, a private historical research firm, to submit a FOIA request on its behalf. The San Francisco crypto exchange was seeking copies of "pause letters" sent to financial institutions asking them to indefinitely cease all "crypto-related activities," according to the complaint.

The letters were described in a report from the FDIC's Office of Inspector General (OIG), but never shared publicly. The OIG said the letters presented a "risk that the FDIC would inadvertently limit financial institution innovation and growth in the crypto space."

The FDIC refused to provide History Associates or Coinbase with the letters.

History Associates Incorporate is suing the SEC for similar reasons. The firm filed FOIA requests with the regulator seeking information about three different investigations—one of them was the recently closed "Ethereum 2.0" investigation.

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"Yet the SEC withheld nearly all responsive records based on boilerplate assertions that these cold cases might relate to some unspecified, ongoing investigations," History associates wrote in its complaint. "Those refusals violated the SEC’s FOIA obligations."

Coinbase and History Associates are far from the first to use FOIA requests to try to gain insight into how D.C. regulators are deciding which projects to target and what financial institutions have been told.

In March 2023, the Blockchain Association filed its own FOIA requests with the FDIC, Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency for "documents and communications involving the de-banking of crypto firms in the United States."

But it ought not have to come to this, said Coinbase Chief Legal Officer Paul Grewal on Twitter.

"This is no way to regulate. And this is no way to operate a transparent government. Today we demand better from our financial regulators," he wrote. "We appreciate the Court’s attention to these important issues and look forward to sharing updates in the future."

Neither the SEC nor the FDIC immediately responded to a request for comment from Decrypt.