Coinbase is escalating its dispute with US regulators over past communications involving former Securities and Exchange Commission Chair Gary Gensler.
Coinbase filed a legal motion on Thursday requesting a hearing to address the SEC Office of the Inspector General’s investigation, which found that the agency deleted nearly one year’s worth of text messages from Gensler and other senior officials in “avoidable” errors.
The exchange said the SEC should explain why it did not conduct a full search of agency records, including text messages from Gensler and senior SEC officials, when it requested the messages in several Freedom of Information Act (FOIA) filings from 2023 and 2024.
According to the motion, Coinbase wants the court compel the SEC to search and produce all responsive communications originally requested, including all messages and documents from Gensler and the agency regarding Ethereum’s shift to proof-of-stake (PoS) consensus. The FOIA filing read:
This Court’s intervention is warranted to determine whether the SEC has in fact violated the Court’s prior orders and to ensure that all available measures are taken to preserve and produce responsive records.”
The exchange also proposed an additional hearing after the materials have been produced and reviewed during legal discovery to address additional remedies such as attorney fees, if needed.
“Following discovery, the parties can then return to the Court, and the Court can determine the appropriate additional remedial measures at that time,” including findings that would “trigger a Special Counsel investigation.”
Spokespeople for the SEC told Cointelegraph that transparency is “paramount” to the agency’s operations and accountability to taxpayers.
“When Chairman Atkins was briefed on this matter, he immediately directed staff to examine and fully understand what occurred and to take steps that will prevent it from happening again,” the SEC spokesperson said.
Crypto companies have long demanded transparency from the SEC regarding its communication related to enforcement actions against crypto projects, which led to an exodus of companies from the US.
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SEC wiped away nearly one year’s worth of messages that Coinbase sought
The SEC lost nearly one year’s worth of Gensler’s text messages from October 2022 to September 2023, according to the SEC Inspector General’s investigative report.
Gensler’s messages were automatically deleted by the SEC’s information technology department before the messages were backed up, according to the investigation.
The SEC sued Coinbase in 2023, alleging that the exchange violated US securities laws by acting as an unlicensed securities broker, a claim the SEC levied against many crypto companies during Gensler’s term.
In response, Coinbase petitioned the US courts to compel the SEC to hand over Gensler’s private email messages, arguing that the former SEC chair’s personal communications would be a significant source of discovery for its legal battle with the SEC.
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