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Cryptocurrency exchange Coinbase sues the SEC and FDIC – here’s why
Key points
- Coinbase has filed a lawsuit against the Securities and Exchange Commission for failing to comply with its requests to disclose past cryptocurrency investigations.
- The cryptocurrency exchange, which claims the SEC has failed to provide regulatory guidance, is also suing the Federal Deposit Insurance Corp. for pressuring the banking industry to sever ties with the cryptocurrency industry.
- The SEC has an ongoing lawsuit against Coinbase over the agency’s position that the company operates an unregistered stock exchange.
Coinbase Cryptocurrency Exchange (CURRENCY) sued U.S. financial regulators on Thursday, alleging they failed to disclose information about previous investigations into the cryptocurrency market and attempted to block the cryptocurrency industry from accessing banking services.
Coinbase, in partnership with consulting firm History Associates Inc., filed a lawsuit in the U.S. District Court for the District of Columbia on Thursday against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corp. (FDIC), further accusing the agencies of withholding crucial information and failing to respond to Coinbase’s requests under the Freedom of Information Act (FOIA).
Agencies Accused of Smothering Cryptocurrency Industry
The complaints allege that regulators, including the SECFDIC and the Federal Reserve BoardThey have been using various tools to stifle the digital asset sector for nearly two years.
The unanswered FOIA requests sought information on the SEC’s view of Ethereumthe transition to a proof-of-stake consensus mechanism, as well as details of closed investigations into individuals and entities associated with the cryptocurrency market, according to the complaints. The SEC’s denials of these documents, which were rejected citing potential harm to active enforcement procedures, have been criticized by Monetary base as obstructive and contrary to the intentions of the FOIA.
“Financial regulators have used multiple tools at their disposal to try to cripple the digital resource industry,” Paul Grewal, Coinbase’s chief legal officer, wrote on X on Thursday. “@SECGov has claimed absolute authority, but refuses to provide rules, let alone coherent or consistent rules. While @FDICgov has pressured financial institutions to cut the industry out of the banking system.”
Coinbase’s complaint against the F.D.I.C. also addresses “pause letters” sent to FDIC-supervised financial institutions, which allegedly aimed to halt cryptocurrency-related activity, framing the letters as part of a larger scheme to isolate digital asset companies from banking services.
The cases follow the SEC’s lawsuit against Coinbase
The SEC has an open case against Coinbase relating to the alleged operation of an unregistered stock exchange. Coinbase said the SEC has been unwilling to work with the cryptocurrency industry on the provision regulatory claritywhile SEC Chairman Gary Gensler did maintained that cryptocurrencies are regulated by existing securities laws.
Coinbase CEO Brian Armstrong said last year the exchange may need to move away from the United States to protect its business.
While the SEC has taken several actions against the cryptocurrency industry over the past two years, there have been signs of a less adversarial approach recently. Last month, spot ether exchange-traded funds (ETF) they were approved for listing in a surprise move by the SEC. This week the regulator Investigation into Ethereum 2.0 closed with no charges filed against blockchain technology company Consensys.
Coinbase shares rose more than 4% on Thursday.