Regulation
Coinbase Sues SEC, FDIC for Cryptocurrency Regulatory Information
Coinbase launches new legal offensive against the Securities and Exchange Commission and the Federal Deposit Insurance Corporation to obtain documents related to the agencies’ approaches to regulating cryptocurrencies, FOX Business has learned.
According to lawsuits filed Thursday In a Washington, D.C. district court, the largest cryptocurrency exchange in the United States is suing two regulators for access to internal records to shed light on what it describes as a “deliberate and concerted effort by the SEC, FDIC and other financial regulators” to pressure banks to deny cryptocurrency businesses access to the federal banking system.
“For years, financial regulators — including the SEC, FDIC, and Federal Reserve — have used every tool at their disposal to try to cripple the digital asset industry,” a Coinbase spokesperson said in a statement to FOX Business. “We demand transparency from our federal government.”
The SEC declined to comment. The FDIC did not immediately respond to a request for comment.
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A representation of the cryptocurrency is seen in front of the Coinbase logo in this illustration taken on March 4, 2022.
The move follows Coinbase’s attempts to retrieve information through the Freedom of Information Act regarding three SEC investigations into cryptocurrency companies and entrepreneurs between 2018 and 2024, including its recently closed probe into the Ethereum blockchain network. The exchange hopes the requested information will help it better understand how the SEC’s views on digital assets have evolved over the years.
Coinbase also requested details about so-called “pause letters” sent by the FDIC between March 2022 and May 2023 to a handful of banks asking them to suspend all crypto-related activity until it could provide additional guidance on the risks associated with it.
The pause letters were revealed following an October report from the FDIC’s Office of Inspector General detailing the agency’s strategies regarding risks associated with cryptocurrencies.
Coinbase claims it was denied access to the information requested by the SEC and FDIC, even though it is legally entitled to do so under the Freedom of Information Act, which allows the public to request access to nonpublic records of federal agencies.
The headquarters of the United States Securities and Exchange Commission (SEC) is seen in Washington, DC, on January 28, 2021.
This is the second time this month that the SEC has been sued for failing to comply with FOIA requests. On June 6, the American Securities Association sued the agency for documents related to its investigations into the record-keeping practices of dozens of companies. Wall Street Companies including Morgan Stanley, JPMorgan and Goldman Sachs.
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In this case, the ASA was denied access on the grounds that it could compromise similar investigations and enforcement actions at other companies.
According to Coinbase’s lawsuits, the SEC and FDIC are using similar grounds to deny Coinbase the information it seeks, including whether senior agency officials are using coordinated pressure tactics to “smother” the $2 trillion digital asset industry from the lifeblood of the federal banking system.
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Coinbase is referring to what’s being called “Operation Chokepoint 2.0,” a colloquial term used by those in the crypto industry to refer to what they see as a concerted effort by financial regulators to make it difficult or, in some cases, outright deny crypto businesses access to the banking services they need to exist in the U.S. economy. The “2.0” part is an homage to a 2013 law enforcement initiative dubbed “Operation Chokepoint,” in which federal regulators in the The Obama administration They have refused banking services to so-called “high-risk” businesses, such as payday lenders, which charge consumers high-interest short-term loans.
Others in the cryptocurrency industry have claimed that financial institutions have restricted or terminated their access to digital asset services.
On Wednesday, the founder of cryptocurrency exchange Shapeshift, Erik Voorhees, taken to X to complain that fintech company Revolut had closed his account for “interaction with crypto.”
Custodia, a Wyoming-based crypto bank, is currently attractive a judge’s decision to authorize the Federal Reserve discretionary power to refuse it access to a so-called main account which would give the State-approved bank access to the liquidity facilities and payment services of the central bank.
In the meantime, Coinbase hopes its lawsuits will help provide a clearer picture of the SEC’s thinking behind its own enforcement action against the exchange, which is currently being litigated in federal court in New York because the SEC claims Coinbase is violating securities laws by offering potential opportunities. unregistered titles in the form of cryptocurrencies on its platform.
Coinbase claims the SEC has refused to express a consistent opinion on the application of securities laws to digital assets, ultimately harming industry participants.
However, the company may be waiting a long time to get the information it seeks. According to a recent report from the Government Accountability Office, there is a huge backlog of FOIA requests due to the increase in the volume and depth of information sought by companies and individuals in recent years. The report shows that in 2022, the government-wide backlog of requests exceeded 200,000 requests for the first time.
Source of the original article: Coinbase Sues SEC, FDIC for Cryptocurrency Regulatory Information