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Cryptocurrency exchange Coinbase sues the SEC and FDIC – here’s why
Key points
- Coinbase is suing the Securities and Exchange Commission for failing to comply with its requests for disclosure of 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 is suing Coinbase over the agency’s claim that the company operates an unregistered exchange.
Cryptocurrency exchange Coinbase (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 Boardhave used various tools to stifle the digital asset industry for almost two years.
Unanswered FOIA requests sought information on the SEC’s views Ethereumaccording to the complaints, the transition to a proof-of-stake consensus mechanism, as well as details of closed investigations into individuals and entities associated with the cryptocurrency market. The SEC’s denials of these documents, which were rejected citing potential harm to active enforcement proceedings, 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 FDIC also addresses “suspension letters” sent to financial institutions overseen by the FDIC, which allegedly aimed to block cryptocurrency-related activity, framing the letters as part of a larger plan to isolate digital asset firms from banking services.
The cases follow the SEC’s lawsuit against Coinbase
The SEC has an open case against Coinbase related to the alleged operation of an unregistered stock exchange. Coinbase said the SEC has been unwilling to work with the cryptocurrency industry to provide regulatory claritywhile SEC Chairman Gary Gensler does maintained that cryptocurrencies are regulated by applicable securities laws.
Coinbase CEO Brian Armstrong said this 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 (ETFs) 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.