Coinbase Criticizes SEC’s Record Management Practices
Coinbase, a major player in the cryptocurrency exchange market, has openly criticized the US Securities and Exchange Commission (SEC) for what it perceives as a deliberate mishandling of important records. The accusation centers on the SEC’s alleged destruction of text messages crucial to ongoing crypto-related legal proceedings.
Coinbase Challenges the SEC’s Record-Keeping
In an effort to bring transparency to the SEC’s evolving stance on cryptocurrency regulation, Coinbase, with the assistance of the historical research firm History Associates, has taken legal action. They filed a case under the Freedom of Information Act (FOIA) in a federal court. Paul Grewal, Coinbase’s Chief Legal Officer, articulated the company’s grievances, citing a severe breach of public trust by the regulatory body. This move aims to prevent future occurrences.
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Grewal highlighted on social media platform X that the SEC, under Gary Gensler’s leadership, had failed to preserve and provide necessary documents, including text messages that should have been disclosed years earlier. The revelation followed an internal report from the SEC’s Office of Inspector General, which outlined various preventable errors within the agency’s IT sector, ultimately leading to the loss of records pertinent to crypto enforcement actions during Gensler’s time in office.
Allegations of Record Destruction
The court filing illuminated how the SEC allegedly obstructed public scrutiny by disregarding FOIA requirements and eliminating key documents. Coinbase’s legal proceedings underscore a report indicating that the agency deliberately omitted text messages from SEC officials in FOIA responses, despite their relevance. Moreover, the missing messages from Gensler were reportedly deleted after FOIA requests were submitted but before any litigation commenced.
The document further claims that similar incidents affected the communications of over 20 senior SEC officials, with the potential for additional records to be at risk. It is alleged that the SEC was aware of these issues for two years but failed to disclose them during the 14-month litigation process with History Associates.
Addressing Accountability and Compliance
Coinbase’s CLO emphasized that the SEC’s actions were not accidental oversights but rather deliberate destruction of evidence linked to ongoing litigation. The legal document argues that the SEC’s “too little, too late” searches are insufficient and that a timely response to FOIA requests in July and August 2023 could have preserved important records.
The case stresses that the SEC has imposed substantial fines on private entities for similar record-keeping failures, advocating for equal accountability for all. To ensure the SEC adheres to its own standards and to prevent recurrence, Coinbase urges the court to mandate an expedited and thorough search for the missing texts, investigate the agency’s record handling, and impose necessary sanctions.
Conclusion
Within recent years, the SEC has fined private parties over a billion dollars for inadequate preservation of securities-related communications. Coinbase believes that the same level of accountability should apply to the SEC, advocating for fair play and adherence to established record-keeping norms.
To uphold these principles, Coinbase seeks a court hearing and appropriate measures to ensure all relevant communications are uncovered, and the SEC’s compliance with record-keeping requirements is enforced.
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