Coinbase Takes Legal Action Against SEC and FDIC Over Crypto Information Requests

Coinbase Seeks Transparency from Regulatory Bodies

In a bold move to ensure transparency, 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). The lawsuits, filed in the United States District Court for the District of Columbia, demand that the SEC and FDIC comply with the Freedom of Information Act (FOIA) regarding their actions towards crypto entities.

SEC’s Expanding Authority Questioned

Coinbase argues that the SEC has overstepped its boundaries by claiming extensive authority over the burgeoning crypto sector. The exchange asserts that the SEC’s actions lack a solid foundation in securities laws and have instead led to an aggressive enforcement campaign against crypto firms. This regulatory overreach, according to Coinbase, is an attempt to stifle the digital asset industry in collaboration with other financial watchdogs like the FDIC.

Coinbase Push for FOIA Compliance

Together with professional services research firm History Associates, Coinbase has requested that the SEC provide records from three investigations into crypto firms and entrepreneurs. One notable investigation pertains to Ethereum’s native asset, Ether, which the SEC stated was not a security in 2018.

Despite the closure of the Ethereum 2.0 investigation last week, which indicated that Ether remains outside the security classification, the SEC has withheld all records related to the three cases. Coinbase contends that this refusal violates the FOIA.Read more: Ethereum’s Regulatory Victory: SEC Concludes Securities Investigation

FDIC’s Lack of Cooperation Criticized

Paul Grewal, Coinbase’s chief legal officer, highlighted that the FDIC has similarly stonewalled requests for letters instructing financial institutions to halt crypto-related activities. This lack of cooperation contradicts the FDIC’s Office of Inspector General’s past criticisms, which warned that such actions could hinder financial innovation and growth within the crypto space. Grewal emphasized the need for transparent regulation and expressed hope for a favorable court decision.

Ongoing Legal Tussles

Amidst these legal challenges, the SEC continues its lawsuit against Coinbase, alleging that the exchange operates as an unregistered securities exchange. This ongoing suit adds another layer of complexity to Coinbase’s battle for regulatory clarity and fair treatment within the financial ecosystem.