The global crypto exchange platform, Coinbase, has recently filed a legal motion against the US Securities and Exchange Commission (SEC). The company has accused the Commission of violating the Freedom of Information Act (FOIA) and said it has damaged public trust.
Coinbase Files Legal Motion Against SEC
In its court filing on Tuesday, Coinbase outlines how the SEC failed to comply with previous orders to disclose communications related to Ethereum and other digital assets. Now, the crypto industry is accusing the SEC of raising a “credibility crisis” that can weaken the regulator’s position in future enforcement actions.
Coinbase says that the SEC’s actions have hindered the ability to fully review crucial communications, which could have influenced the public understanding of the agency’s decisions.
In a recent X post, the chief legal officer at Coinbase, Paul Grewal, said, “The Gensler SEC destroyed documents they were required to preserve and produce. We now have proof from the SEC’s own Inspector General. Today, we ask the federal court to address this gross violation of public trust to ensure that it never happens again.”
What Happened Between Coinbase and the SEC?
On September 3, the SEC Office of Inspector General released a report that revealed that the agency had deleted a year’s worth of text messages from former SEC Chair Gary Gensler. Those messages reportedly contained crucial information regarding the FTX Collapse and key enforcement actions involving Coinbase.
The deletion occurred after Coinbase submitted a FOIA request, seeking all communications related to crypto regulatory decisions. This move raised questions about the integrity of the SEC’s handling of records, especially those related to digital asset regulation.
Coinbase’s Demand Against the SEC
Now, Coinbase is urging the court to impose sanctions on the SEC for mishandling the records. The company also demands expedited discovery to find out how many records have been destroyed by the agency.
The crypto company also pointed out the agency’s double standards. Grewal said, “Considering the double-standards of the previous Chair, it’s not surprising that the same agency that fined firms billions for record-keeping failures committed the exact same violations.”
Coinbase believes that the SEC failed to disclose the deletion of texts in a timely manner, which certainly harmed public trust. It now insists that the agency hold accountability for causing “irreparable harm.”
