Coinbase Takes Legal Action Against US Regulators for Crypto Regulation Information
Coinbase’s Lawsuit Against SEC and FDIC
Coinbase, the largest cryptocurrency exchange in the United States, has filed lawsuits against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) to obtain documents related to their approaches to crypto regulation. The exchange alleges that the regulators have been deliberately denying access to banking services for crypto firms, a practice known as “Operation Chokepoint 2.0.”
Information Requested by Coinbase
Coinbase has requested emails and documents from the SEC regarding three previous investigations into crypto firms and entrepreneurs. It believes this information will provide insights into the SEC’s evolving stance on digital assets.
Additionally, Coinbase has asked the FDIC for details of “pause letters” sent to banks cautioning them against engaging in crypto-related activities. These letters have raised concerns about the risks associated with cryptocurrencies.
SEC’s Response and FOIA Backlog
The SEC has declined to comment, while the FDIC has not yet responded. Coinbase claims that both agencies have denied its requests for information, despite their legal obligation under the Freedom of Information Act (FOIA).
Coinbase’s lawsuits come amid a surge in FOIA requests, leading to a massive backlog. The Government Accountability Office recently reported that the government-wide request backlog surpassed 200,000 requests for the first time in 2022.
Crypto Industry’s Concerns
Coinbase’s legal challenge reflects the concerns of many in the crypto industry. Financial institutions have been accused of restricting or terminating services for businesses associated with digital assets. Wyoming-based crypto bank Custodia is currently appealing a judge’s ruling that allows the Federal Reserve to deny it a master account.
Impact on Coinbase’s Litigation with SEC
Coinbase’s lawsuits may provide insights into the SEC’s thinking behind its enforcement action against the exchange. The SEC alleges that Coinbase is offering potential unregistered securities in the form of cryptocurrencies on its platform.
Coinbase argues that the SEC has not provided a consistent view on the application of securities laws to digital assets, which is hindering industry development.
History Associates’ Lawsuit Against FDIC
Coinbase’s intermediary, History Associates, Inc., has also filed a lawsuit against the FDIC. It claims that the FDIC’s “pause letters” are part of a coordinated effort to pressure banks into limiting access to digital-asset firms.
Coinbase’s Legal Strategy
Coinbase’s lawsuits are just one part of its legal strategy. The exchange has also funded lawsuits against the US Treasury Department over sanctions against crypto mixer Tornado Cash and is seeking a court order to force the SEC to issue guidance on digital asset securities.
Conclusion
Coinbase’s challenges to US regulators demonstrate the ongoing battle over crypto regulation. The exchange’s lawsuits aim to provide transparency and hold regulators accountable for their actions. The outcome of these legal cases will have significant implications for the future of cryptocurrencies in the United States.