Coinbase Sues SEC, Demands Transparency From US Regulators

Coinbase, a market-leading cryptocurrency exchange, has filed two civil lawsuits against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC).

The lawsuits are specifically for the regulatory body’s failure to comply with Coinbase’s Freedom Of Information Act (FOIA) requests.

US Regulators Under Fire

In late 2023, Coinbase hired History Associates Incorporated (HAI), who are a private historical research firm.

Via HAI, Coinbase submitted an FOIA request, because the company was searching for copies of “pause letters” sent to multiple financial institutions by regulators asking them to indefinitely cease all “crypto-related activities.” Coinbase and HAI have previously requested copies of the letters from the FDIC but were refused.

The FDIC’s Office of Inspector General (OIG) mentioned the letters in a report. The OIG stated that the letters presented a “risk that the FDIC would inadvertently limit financial institution innovation and growth in the crypto space”.

WOW. Coinbase sued the FDIC (and SEC) alleging a concerted campaign to de-bank crypto startups. They use the Operation Choke Point 2.0 term a number of times in the complaint. https://t.co/IK86PGicXm pic.twitter.com/8pvZxCw86h

— nic carter (@nic__carter) June 27, 2024

Similar reasons have been given as to why HAI are now suing the SEC. The historical research company filed further FOIA requests with the SEC seeking information about three separate investigations. One of the three investigations was the notable “Ethereum 2.0” case. It was recently closed by the SEC, in what was a major win for the crypto industry.

Read More: Coinbase And Stripe Partner For Seamless Fiat-To-Crypto Transactions

Coinbase Demands Transparency From Regulators

Paul Grewal, Chief Legal Officer at Coinbase has spoken on the situation on social media platform, X.

In the thread he said “Financial regulators have used multiple tools at their disposal to try to cripple the digital-asset industry. SEC has claimed sweeping authority, but refuses to provide any rules, let alone consistent or coherent ones. ”

Grewal added, “While FDIC pressured financial institutions to cut off the industry from the banking system. Today we filed lawsuits under the Freedom of Information Act for requests we made over a year ago seeking important information to which we, and the public, are entitled.”

We asked the SEC for documents about closed investigations to shed light on how the SEC views its newfound, sweeping (and unlawful) authority. One of those investigations, which only recently closed, focused on ETH, which the SEC publicly announced is not a security in 2018. And…

— paulgrewal.eth (@iampaulgrewal) June 27, 2024

Grewal finished his tirade by stating “This is no way to regulate. And this is no way to operate a transparent government. Today we demand better from our financial regulators”.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.