Update in DEF's Patent Challenge; Coinbase Continues to Seek Transparency in Litigations

Update in DEF’s Patent Challenge

DEF is excited to share that we have resolved all disputes related to the patent claiming invention of oracle-like technology owned by True Return Systems.

As a quick refresher, in September 2023, DEF petitioned the US Patent & Trademark Office for the cancellation of a patent held by True Return Systems (TRS) that effectively covers systems linking off-chain data to a blockchain (like oracles).

Last Friday, DEF reached an agreement with True Return Systems to purchase the patent and dismiss the ongoing litigations against Compound Protocol and Maker DAO. 

With the patent in hand, DEF will dedicate it to the public so that the patent can never again be used against those deploying oracle technology.

Coinbase Continues to Seek Transparency in Litigations

SEC v. Coinbase

Last week, the Securities and Exchange Commission (SEC) filed its response to Coinbase’s motion to compel production of documents in their ongoing litigation, SEC v. Coinbase. On July 23rd, Coinbase filed the motion seeking discovery related to the tokens the SEC included in its complaint against Coinbase, the SEC’s consideration for public offering, and statements that SEC Chair Gensler had made in his personal and professional capacity during his tenure as SEC Chair. 

The SEC’s response, filed last week, reiterates its previous argument that Coinbase’s discovery demands will not result in the production of evidence relevant to the SEC’s claims or Coinbase’s fair notice defense, and that the burden of Coinbase’s requests is disproportionate to the needs of the case. 

FOIA Litigation

Also last week, the SEC and Federal Deposit Insurance Corporation (FDIC) filed responses to the Complaints filed against each entity under the Freedom of Information Act (FOIA). As a reminder, in June, History Associates Incorporated filed lawsuits, on behalf of Coinbase, against the SEC and FDIC to procure documents under FOIA. Coinbase is seeking SEC documents regarding “closed investigations to shed light on how the SEC views its newfound, sweeping (and unlawful) authority” over digital assets like Ethereum. Coinbase also requests that the FDIC provide copies of letters sent to financial institutions in which the “FDIC requested [the financial institutions] indefinitely pause their crypto-related activities.” In their response, both the SEC and FDIC acknowledge that the documents Coinbase seeks do exist. However, in their responses, both agencies claim government privilege protects their right to withhold them.

What does this mean? 

As litigation ramps up between various digital asset companies and the SEC, industry participants will continue seeking transparency and disclosure regarding SEC’s internal policy and investigations. Federal agencies should be transparent about their internal policies and procedures, especially pertaining to enforcement actions against participants in a burgeoning industry.