The U.S. Securities and Exchange Commission has settled a Freedom of Information Act lawsuit brought by Coinbase over access to internal communications related to the agency's approach to cryptocurrency regulation during Gary Gensler's tenure.

The dispute followed several years of aggressive SEC enforcement activity against the crypto industry, particularly after the collapse of FTX. While the regulator had previously sued a number of major crypto companies, the Coinbase case put the agency in the position of defendant and resulted in commitments related to document disclosure and recordkeeping procedures. The settlement arrives as the SEC transitions under new leadership that has signaled a shift away from the enforcement-first approach that defined the Gensler era, including the formation of a dedicated crypto regulatory task force and the dismissal or pause of several enforcement actions previously brought against digital asset firms.

From Defendant to Plaintiff

Legal conflicts between Coinbase and the SEC began in 2023, when the regulator sued the largest U.S.-based cryptocurrency exchange. The roles reversed a year later, when Coinbase, through its research firm History Associates, sued the SEC after the agency denied requests for internal communications concerning its crypto regulatory approach.

The company led by Brian Armstrong argued that the requested records could provide insight into how the SEC developed its enforcement strategy against crypto firms during the Biden administration. Coinbase said the documents could also shed light on the legal theories behind several high-profile lawsuits. During that period, the SEC brought cases against industry participants including Binance, Ripple, and others.

Under the settlement, the SEC 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.

Coinbase Chief Legal Officer Paul Grewal announced the settlement in an opinion piece, describing it as an important win for government transparency. As of press time, the SEC had not issued an official confirmation.

During Gensler's leadership, the SEC imposed billions of dollars in penalties on banks and financial institutions for failing to preserve employee communications sent through text messages and other unofficial channels. Coinbase argued that the regulator should be subject to the same standards it enforced against private-sector entities. The dispute escalated after the SEC disclosed that certain text messages involving Gensler and other senior officials had been automatically deleted, leaving them unavailable for production under the FOIA requests.

The settlement does not establish wrongdoing by the SEC. However, it requires the agency to review its record-retention procedures, a development viewed as significant because the regulator's own rules emphasize the preservation of official communications.