The US Securities and Exchange Commission went on a blatant war against the cryptocurrency industry in the past couple of years of Gary Gensler’s tenure, especially following the loud collapse of FTX.
However, the new administration settled most cases, and now it was time for one that was actually initiated by Coinbase. It came with some groundbreaking changes as well.
From Defendant to Plaintiff
The legal disputes between the two parties began in 2023 when the regulator went after the largest US-based crypto exchange. However, the roles reversed a year later when Coinbase, through its research firm History Associates, sued the watchdog after the latter denied requests for internal communications related to its approach to crypto regulation.
The Brian Armstrong-led firm argued that the requested records could shed some light on how the SEC developed its enforcement strategy against crypto companies during the Biden administration, including legal theories underpinning several high-profile lawsuits. Recall that the SEC had sued industry giants like Binance, Ripple, and many others.
The agency has now settled with Coinbase in the Freedom of Information Act (FOIA) lawsuit and has agreed to pay $150,000 in attorney fees, release two previously withheld documents, and review its policies governing the presentation of text messages and other electronic communications.
The settlement was announced in an opinion piece by Coinbase Chief Legal Officer Paul Grewal, who said it marked an important victory for government transparency. However, there’s no official confirmation from the SEC as of press time.
Why It Matters
Under Gensler’s leadership, the agency imposed billions of dollars in penalties on banks and financial institutions for failing to preserve employee communications conducted through texts and other unofficial channels. Coinbase, on the other hand, argued that the regulator should be held to the same standards it had enforced against the private sector.
The legal dispute intensified after the SEC disclosed that certain texts involving Gensler and other senior officials had been automatically deleted, making them unavailable for production under the FOIA requests.
Although the settlement does not confirm any wrongdoing by the SEC, it requires the watchdog to review its record-retention procedures, which is believed to be particularly groundbreaking for a regulator whose own rules emphasize preserving official communications.
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