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Key Takeaways
- Coinbase is suing the Securities and Exchange Commission for not complying with its requests to disclose past crypto probes.
- The crypto exchange, which claims the SEC has failed to provide regulatory guidance, is also suing the Federal Deposit Insurance Corp. for pressuring the banking sector to cut ties with the crypto industry.
- The SEC has an ongoing lawsuit against Coinbase regarding the agency’s stance that the company operates an unregistered securities exchange.
Crypto exchange Coinbase (COIN) sued U.S. financial regulators Thursday, saying they failed to disclose information about past investigations into the cryptocurrency market and attempted to block the crypto industry from access to banking services.
Coinbase, partnering with consultancy firm History Associates Inc., filed lawsuits Thursday in the U.S. District Court for the District of Columbia against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corp. (FDIC), also accusing the agencies of withholding crucial information and not responding to Coinbase’s Freedom of Information Act (FOIA) requests.
Agencies Accused of Stifling Crypto Industry
The complaints allege that regulators, including the SEC, FDIC, and the Federal Reserve Board, have used various tools to stifle the digital-asset industry for nearly two years.
The unanswered FOIA requests sought information on the SEC’s view of Ethereum‘s transition to a proof-of-stake consensus mechanism, as well as details from closed investigations into individuals and entities associated with the crypto market, according to the complaints. The SEC’s denials of these documents, which have been refused citing potential harm to active enforcement proceedings, have been criticized by Coinbase as obstructive and contrary to FOIA’s intent.
“Financial regulators have used multiple tools at their disposal to try to cripple the digital-asset industry,” Coinbase Chief Legal Officer Paul Grewal posted Thursday on X. “@SECGov has claimed sweeping authority, but refuses to provide any rules, let alone consistent or coherent ones. While @FDICgov pressured financial institutions to cut off the industry from the banking system.”
Coinbase’s complaint against the FDIC also addresses “pause letters” sent to financial institutions the FDIC supervises, which allegedly aimed to halt crypto-related activities, framing the letters as part of a broader scheme to isolate digital-asset firms from banking services.
Cases Follow SEC Suit Against Coinbase
The SEC has an open lawsuit against Coinbase related to the alleged operation of an unregistered securities exchange. Coinbase has claimed the SEC has been unwilling to work with the crypto industry on providing regulatory clarity, while SEC Chair Gary Gensler has maintained that crypto assets are regulated under existing securities laws.
Coinbase CEO Brian Armstrong last year said the exchange may need to move away from the U.S. to protect its business.
While the SEC has taken several actions against the crypto industry over the past couple of years, there have been recent signs of a less-antagonistic approach. Last month, spot ether exchange-traded funds (ETFs) were approved for listing in a surprise move by the SEC. This week the regulator’s Ethereum 2.0 investigation closed with no charges filed against blockchain technology firm Consensys.
Shares of Coinbase rose more than 4% on Thursday.