In a joint motion submitted to the Southern District of New York, the Securities and Exchange Commission (SEC) and Coinbase request an order to seal specific confidential data.
Since both parties contend that the disputed documents include business information that, if published, would harm their respective companies, this action is sensitive. The SEC’s allegations that Coinbase engaged in actions that securities laws should have governed form the basis of the lawsuit.
SEC and Coinbase Seek Court Approval
Judge Katherine Polk Failla received an application to seal papers along with an explanation of why some records should remain private.
The material obtained from the file includes the publically undisclosed strategic business strategies, internal compliance procedures, and comprehensive financial operations.
The revelation of such information could give competitors unfair commercial advantages or hurt consumer behavior.
The SEC and Coinbase have made arguments indicating how important it is to keep these records sealed to protect their operations and the integrity of the inquiry process. Legal consultants clarified that this is standard procedure when the trial may uncover company secrets.
Context of the Case
In June 2023, the SEC initially brought legal action against Coinbase, claiming the business operated as an unlicensed exchange and broker. In March, a court granted the SEC’s request for Coinbase to be tried for its alleged role in the unregistered sales of securities.
The fact that the jury could hear the claims made in this case was very advantageous to the regulator. Because the existing regulations are inappropriate for the nature of crypto assets, Coinbase asked the SEC to adopt a new framework for regulating crypto asset securities earlier this month.
However, the SEC denied this request, claiming that the existing frameworks are sufficient to handle investor protection and market integrity concerns. The Senate’s recent vote to repeal the SAB 121 rule and the upcoming votes on proposals to loosen cryptocurrency regulations—which the SEC is accused of impeding—have made the regulatory body’s work difficult.
