Coinbase has filed a motion in the U.S. District Court of Columbia, accusing the U.S. Securities and Exchange Commission (SEC) of withholding key documents and using unjustified delays to obstruct access to information vital for its defense.
In the Oct. 15 filing, the exchange claims the SEC improperly relied on FOIA Exemption 7(A) and is now proposing an unreasonable three-year review to reassess the withheld documents.
The U.S. Freedom of Information Act (FOIA), enacted in 1966, allows public access to records from any federal agency. But there are some notable exceptions. One of the nine exemptions, the aforementioned 7(A), allows agencies to withhold documents relevant to law enforcement purposes.
In other words, the SEC is now claiming that satisfying Coinbase’s public records request would interfere with ongoing law enforcement proceedings.
The new filing draws parallels to the SEC’s rejection of a separate motion filed by Coinbase in August 2024, which sought internal communications, including those from SEC Chairman Gary Gensler.
“The SEC’s stonewalling leaves History Associates no choice but to press forward challenging the agency’s already-final, erroneous denials,” Coinbase wrote in its filing.
Meanwhile, the SEC has called Coinbase’s separate subpoena request for additional documents as “overreaching” and burdensome.
In July and August 2023, Coinbase submitted FOIA requests seeking internal SEC records related to Ethereum’s transition to proof-of-stake and earlier enforcement actions involving firms such as Enigma MPC and Zachary Coburn.
The motion states the SEC denied the requests, citing Exemption 7(A), which protects records tied to active law-enforcement proceedings.
After Coinbase filed a lawsuit in June 2024 challenging these denials, the SEC conceded that the exemption “may” no longer apply due to unspecified developments.
On Tuesday, Paul Grewal, Coinbase’s Chief Legal Officer, voiced his frustration on Twitter.
Over a year ago we made FOIA requests aimed at files on ETH 2.0 and other mysteries that belong to all of us, not @SECGov. We then sued to end their stall, only to get an entirely new set of excuses. Their constantly changing story begs the ?s—what is @SECGov hiding and why? 2/4
— paulgrewal.eth (@iampaulgrewal) October 15, 2024
“Over a year ago we made FOIA requests aimed at files on ETH 2.0 and other mysteries that belong to all of us, not [the SEC],” he wrote. “We then sued to end their stall, only to get an entirely new set of excuses.”
According to the filing, the SEC refused to release the documents, stating that it would need three more years to reprocess over 132,000 documents to assess whether other FOIA exemptions apply.
Coinbase’s motion criticizes this delay, pointing out how the SEC should have reviewed the documents for all potential exemptions when it first denied access.
As per the motion, the SEC has indicated it may request an Open America stay, which would postpone the review.
Coinbase contends that such a stay is unwarranted because the SEC had ample time to respond within FOIA’s 20-day statutory window.
In June 2023, the SEC sued Coinbase, alleging it operated as an unregistered securities exchange, broker, and clearing agency, and that its staking services constituted unregistered securities offerings.
Neither the SEC nor Coinbase have yet responded to requests for comments from Decrypt.
Edited by Stacy Elliott.
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Source: https://decrypt.co/286536/coinbase-sec-erroneous-denials-foia
