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Highlights
- Coinbase CLO Paul Grewal challenges SEC over Ethereum 2.0 docs
- SEC admits Ethereum case closed, decision expected by 2025
- FDIC's "pause letters" in crypto banking under legal scrutiny by Coinbase
Coinbase’s Chief Legal Officer, Paul Grewal, has given an account of the Freedom of Information Act (FOIA) lawsuit that is being conducted by the U.S Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC).
Grewal indicated that the SEC has confirmed its Ethereum 2.0 investigation is closed, and summary judgment briefing will follow, with a decision expected in 2025.
SEC and FDIC Withholding Documents
In a series of post, Coinbase Chief Legal Officer Paul Grewal stated that the SEC and FDIC have acknowledged the existence of the documents requested by Coinbase. However, they stated they are entitled to withhold them due to governmental privilege.
Yesterday both @SECGov and @FDICgov filed Answers in our FOIA litigation suits. As a reminder, the SEC improperly withheld documents from closed investigations (including Ethereum 2.0), and the FDIC improperly withheld the "pause letters" it sent to banks warning them to stop…
— paulgrewal.eth (@iampaulgrewal) August 8, 2024
Coinbase is currently seeking discovery of documents related to concluded investigations, one of which involves Ethereum 2.0 which the SEC has recently confirmed is closed. The FDIC has also denied releasing the so-called ‘pause letters’ sent to banks to cease engagements with crypto firms.
”We requested documents from the SEC regarding closed investigations to see how the SEC thinks about its new and expansive (and unconstitutional) power,” Grewal said. In particular, one of the investigations that was just recently concluded was related to ETH, which the SEC stated is not a security in 2018.”
This closure of the Ethereum case and declaration that it is not a security came ahead of the XRP lawsuit. According to a Coingape report, Ripple was required to pay slightly over $125 million in civil penalties, thus closing the SEC lawsuit and determining that XRP is not a security.
Coinbase CLO Timeline For Summary Judgement
The SEC had earlier rejected disclosure requests citing FOIA’s “exemption 7A” which shields information which may hinder law enforcement. Grewal pointed out that there will be no discovery in these cases and the summary judgment briefing is expected to follow with the final decision expected to be made in 2025.
Earlier, History Associates Inc., working on behalf of Coinbase, initiated the lawsuit against the SEC and FDIC. They contended that the regulators have wrongfully denied the FOIA requests that should be disclosed under the open-records laws. These documents are important in order to comprehend how the SEC comes to its decision regarding which digital assets are securities.
This lawsuit is among several others that exist between Coinbase and U.S. financial regulators. Now is one still in court in which the SEC alleges that Coinbase operated an unregistered securities exchange.
Moreover, Coinbase also sued the SEC to compel the regulator to provide guidance on what it means by a digital asset securities. Subsequently, the lawsuit against the FDIC claimed the pause letters are part of a strategy used by financial authorities to force banks to cut their cooperation with digital asset companies.
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