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The largest US-based crypto exchange by trading volume is taking on two of the country’s top financial regulators in a new lawsuit.
In a lawsuit filed in Washington D.C. today, Coinbase accuses the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) of attempting to “cripple” the crypto industry.
“For years, the SEC has refused to articulate a consistent or coherent view on the securities laws’ application to digital assets.
The agency’s latest position—that it has sweeping authority over the vibrant and rapidly expanding digital asset industry—has no basis in the securities laws and has never coherently been explained by the agency. Instead, the SEC has waged a scorched-earth enforcement war on digital-asset firms that, in conjunction with efforts by other financial regulators to de-bank crypto firms, is designed to cripple the digital-asset industry.”
In the suit, Coinbase describes the SEC’s classification of certain cryptos as securities as “inapt.”
“It has not explained the contradictory congressional testimony of its Chair, who declared scarcely three years ago that the agency lacks authority to regulate digital asset exchanges like Coinbase. It has refused to modify its rules to make them workable for digital asset firms. And it has claimed that it need not even allow the $2 trillion digital asset industry to comply with its existing rules.”
Coinbase also claims that the SEC failed to comply with its Freedom of Information Act (FOIA) requests.
“Seeking to enforce FOIA’s check on administrative opacity, Coinbase retained Plaintiff History Associates to request that the SEC provide records concerning three SEC investigations into digital-asset firms and entrepreneurs—with the goal of divining how the SEC views its newfound, sweeping, and unlawful authority.
One of those investigations focused on Ether—the digital asset used in Ethereum—which the SEC publicly announced is not a security in 2018. That investigation was recently closed by the agency, and the other two investigations have been closed for years. Yet the SEC withheld nearly all responsive records based on boilerplate assertions that these cold cases might relate to some unspecified, ongoing investigations. Those refusals violated the SEC’s FOIA obligations.”
Earlier this month, Coinbase chief legal officer Paul Grewal described the SEC as “bent on choking” the crypto industry.
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