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Coinbase Sues SEC and FDIC Over Alleged Attempts to Squelch Crypto Industry – Coinbase Glb (NASDAQ:COIN)
Cryptocurrency exchange CoinBase COIN filed a lawsuit against the Securities and Exchange Commission and the Federal Deposit Insurance Corporation for failing to comply with Freedom of Information Act requests.
What happened: The company is looking for a court order to compel these agencies to comply with requests for information.
In lawsuits filed Thursday in the U.S. District Court for the District of Columbia, Coinbase accuses federal financial regulators of trying to impede the cryptocurrency industry’s access to the banking sector.
“For nearly two years, a wide range of federal financial regulators – including the Securities and Exchange Commission, the FDIC and the Federal Reserve Board – have used every regulatory tool at their disposal to try to cripple the digital asset industry,” the report said. FDIC complaint against states.
“This FOIA lawsuit seeks to bring to light the FDIC’s role in this illegal scheme.”
FOIA requests, handled by the consultancy firm History Associates Inc.has requested information from the SEC regarding the agency’s view on the matter Ethereum ETH/USD, specifically its transition to a proof-of-stake consensus mechanism.
These requests were denied, with the SEC subsequently dismissing their appeals.
Additionally, requests for documents related to the investigations into Zachary Coburn and Enigma MPC were also denied, with the SEC citing potential harm to ongoing enforcement proceedings.
“The SEC’s logic for hiding documents from investigations concluded into the deals years ago is tailored to frustrate the legitimate purposes for which Coinbase sought the Coburn and Enigma MPC documents in the first place: to understand the law’s underlying vision of SEC decisions a blitzkrieg against the digital asset industry,” Coinbase said in its complaint.
“The SEC’s stonewalling violates its FOIA obligations.”
In its complaint against the FDIC, Coinbase pointed to the agency’s “pause letters,” sent between March 2022 and May 2023 to financial institutions, advising them to suspend expansion of cryptocurrency-related businesses until they were provided further information.
These letters have been described as part of “Operation Choke Point 2.0”, aimed at stifling crypto firms’ access to banking services.
“The Pause Letters were not a good faith attempt to supervise the cryptocurrency-related activities of financial institutions,” the complaint reads.
“This was a transparent effort to stop these activities altogether, part and parcel of the FDIC and other regulators’ plan to exclude digital asset companies from necessary banking services.”
History Associates requested copies of these suspension letters, but the FDIC denied the request, arguing that disclosure of the letters would reveal confidential communications between the banks and their regulator.
Read also: Bitcoin Downside Risk Looms Again in July: JPMorgan
Because matter: This is not the first legal confrontation between Coinbase and regulators.
In April 2023, the exchange sued the SEC to force it to respond to its petition for regulation of the cryptocurrency industry, highlighting ongoing tensions over regulatory clarity.
Coinbase initially asked the SEC to establish a formal regulatory process for the cryptocurrency industry in July 2022.
While the SEC has proposed some rules impacting cryptocurrencies, the industry has criticized the regulator’s approach as “regulation through enforcement.”
The SEC has taken enforcement actions against various crypto platforms, including a lawsuit against Coinbase for operating without proper registration.
Chairman of the SEC Gary Gensler argues that most cryptocurrencies should be regulated like securities, while the industry calls for clearer regulatory guidance.
For those interested in the evolving digital asset landscape and regulatory impacts, Benzinga The future of digital assets The November 19 event will feature in-depth discussions and insights from industry leaders and experts.
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