Regulation
Coinbase Sues SEC, FDIC Over Cryptocurrency Regulation Information
Coinbase is launching a 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 U.S. cryptocurrency exchange is suing both regulators to gain access to internal records and shed light on what it describes as a “deliberate and concerted effort by part of the SEC, FDIC and other financial regulators” to pressure banks to deny cryptocurrency firms access to the federal banking system.
“For years, financial regulators, including the SEC, FDIC, and Federal Reserve Board, have used every tool at their disposal to try to cripple the digital asset industry,” a Coinbase spokeswoman said in a statement. 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.
COINBASE CEO SAYS COMPANY DONATED $25 MILLION TO VOTE ANTI-CRYPTO POLITICIANS OUT OF CONGRESS
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 investigation into the Ethereum blockchain network. The exchange hopes the requested information will give it a better understanding of the SEC’s evolving views on digital assets over the years.
Coinbase also requested details of so-called “cease letters” the FDIC sent to a handful of banks between March 2022 and May 2023, asking them to suspend all cryptocurrency-related activity until it could provide further guidance on the risks associated with it.
The pause letters were revealed following an October report from the FDIC’s Office of Inspector General that detailed the agency’s strategies related to risks associated with cryptocurrencies.
Coinbase says it was denied access to the information requested by both the SEC and the FDIC, even though it was legally entitled to do so under the Freedom of Information Act, which allows the public to request access to non-public documents from federal agencies.
The U.S. Securities and Exchange Commission (SEC) headquarters 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 subpoenaed the agency seeking documents related to its investigation into record-keeping practices at dozens of Wall Street Companies including Morgan Stanley, JPMorgan and Goldman Sachs.
In that case, the ASA was denied access on the grounds that doing so could jeopardize similar investigations and enforcement actions against other companies.
According to Coinbase’s lawsuits, the SEC and FDIC are using similar reasons to deny Coinbase the information it seeks, including whether the agencies’ top brass are using coordinated pressure tactics to “choke” the $2 trillion digital asset industry out of the lifeblood of the federal government’s banking system.
CRYPTOCURRENCY INDUSTRY APPLAUSES BOWMAN’S DEFEAT, CURTIS’ VICTORY IN KEY ELECTION PRIMARIES
Coinbase is referring to so-called “Operation Chokepoint 2.0,” a colloquial term used by cryptocurrency industry participants to refer to what they see as a concerted effort by financial regulators to make it difficult or, in some cases, deny it altogether cryptocurrency companies access to the banking services they need to exist in the US economy. The “2.0” part is a nod to a 2013 enforcement initiative dubbed “Operation Chokepoint” in which federal regulators in Obama Administration denied banking services to so-called “high-risk” businesses, such as short-term lending institutions, which lend consumers short-term, high-interest loans.
Other cryptocurrency industry players have said financial institutions have limited or shut down access to digital asset pairing services.
On Wednesday, the founder of cryptocurrency exchange Shapeshift, Erik Voorhees, brought to X to complain that fintech firm Revolut had closed his account for “interacting with cryptocurrencies.”
Wyoming-based crypto bank Custodia is currently attractive a judge’s decision to allow the Federal Reserve power to deny it access to the so-called master account, which would allow the state bank to access the central bank’s liquidity lines and payment services.
Meanwhile, Coinbase hopes its lawsuits will help provide a clearer picture of the SEC’s thinking behind its enforcement action against the exchange, which is currently being litigated in a New York federal court as the SEC argues that Coinbase is violating securities laws by offering potential non-nominative securities in the form of cryptocurrencies on its platform.
Coinbase says the SEC has refused to express a consistent view on the application of securities laws to digital assets, which ultimately harms industry operators.
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 an 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 surpassed 200,000 requests for the first time.
Source of the original article: Coinbase sues SEC and FDIC for information related to cryptocurrency regulation