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- Coinbase sues the SEC and FDIC for transparency in crypto regulation, protecting Bitcoin and XRP investors.
- The SEC denies consistent guidance on digital asset securities laws.
In order to obtain crucial documents regarding the Securities and Exchange Commission’s (SEC) and Federal Deposit Insurance Corporation’s (FDIC) policies on cryptocurrency regulation, Coinbase has filed a new court action.
This action is part of Coinbase’s continuous attempts to protect investors in Bitcoin and XRP, as well as to demand openness from financial authorities.
BREAKING: @coinbase Sues SEC and FDIC, Accusing Regulators of Trying to Stifle Crypto Industry pic.twitter.com/CiGbwj4hNB
— SolanaFloor (@SolanaFloor) June 27, 2024
Legal Offensive Launched by Coinbase
Coinbase filed the actions in Washington, D.C., requesting access to internal documents. What Coinbase refers to as a “deliberate and concerted effort by the SEC, FDIC, and other financial regulators” to encourage banks to deny crypto companies access to the federal banking system is anticipated to be revealed by these records.
“Every instrument at their disposal, financial regulators—including the SEC, the FDIC, and the Federal Reserve Board—have used for years to try to cripple the digital-asset industry,” a Coinbase spokesperson told FOX Business. The spokesperson added:
“To ensure fair treatment for all, including Bitcoin and XRP investors, we demand transparency from our federal government.”
Coinbase filed complaints after attempting to get information under the Freedom of Information Act (FOIA) on three SEC investigations of cryptocurrency companies and entrepreneurs between 2018 and 2024, one of which was just closed and concerned the Ethereum blockchain network.
Coinbase also requested specifics of “pause letters” that the FDIC had sent to a few banks between March 2022 and May 2023, asking them to stop doing anything connected to cryptocurrencies until more information on the risks involved could be given.
Pause Letters Revealed
An October report by the FDIC’s Office of the Inspector General included the pause letters and described the agency’s approaches to the dangers connected to cryptocurrency. Though Coinbase is legally entitled to the information under FOIA, it says the SEC and FDIC refused to provide it.
The SEC and FDIC, according to Coinbase’s claims, denied the information on comparable grounds, including if high management at these agencies planned pressure strategies to “choke off” the $2 trillion digital assets market from necessary banking services.
Coinbase refers to “Operation Chokepoint 2.0,” a term that the cryptocurrency community coined to describe what they believe to be a coordinated effort by financial authorities to prevent cryptocurrency companies from obtaining essential banking services.
This is similar to a 2013 effort by Obama administration federal authorities to refuse to provide banking services to “high-risk” companies such as payday lenders.
SEC Enforcement Action
Coinbase also expects its actions to shed light on the SEC’s justification for taking enforcement action against the exchange. Currently pending before a federal court in New York, the SEC is alleging that Coinbase is breaking securities regulations by providing possible unregistered securities in the form of cryptocurrency.
In the end, Coinbase contends, industry players are suffering because the SEC has not offered a unified perspective on how securities rules apply to digital assets.
Conversely, Coinbase has shown its dedication to growing cryptocurrency trading prospects despite regulatory obstacles by launching pre-launch trading for early access to altcoins, as CNF previously reported.
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