New reports on Thursday revealed that Coinbase is suing the SEC. And the Federal Deposit Insurance Corporation (FDIC) via a third party.
The Coinbase suit alleges that both regulators failed to provide documents required by open-records laws that would have revealed the regulators’ opinions about cryptocurrencies.
Coinbase Sues SEC and FDIC Over Crypto Records
The suit claims that the SEC and FDIC disregarded Freedom of Information Act (FOIA) requests filed with the U.S. District Court for the District of Columbia. It also accuses the federal agencies of trying to keep the crypto industry out of the banking sector.
Coinbase, in its FOIA requests, sought information from the SEC on its position on Ethereum. It showed specific interest in the blockchain’s transition to a proof-of-stake (PoS) consensus mechanism. Coinbase, using its consulting company History Associates Inc., requested documents about Ethereum 2.0 and other investigations concerning Zachary Coburn and Enigma MPC.
Furthermore, Coinbase’s suit states that there is a larger attempt to weaken the cryptocurrency industry through the regulatory steps taken against it. The exchange views the SEC’s reluctance to provide records from completed investigations as “a deliberate obstruction to understanding the legal framework behind the agency’s enforcement actions.”
History Associates, in a document, stated, “For nearly two years, a wide array of federal financial regulators—including the Securities and Exchange Commission (“SEC”), the FDIC, and the Federal Reserve Board — have used every regulatory tool at their disposal to try to cripple the digital-asset industry. This FOIA lawsuit seeks to bring to light the FDIC’s role in that unlawful scheme.”
Complaint Against the FDIC
In its suit against the FDIC, Coinbase said History Associates requested FOIA documents about the agency’s “pause letters.” The FDIC reportedly started sending “pause letters” to some financial institutions between March 2022 and May 2023. The letters ordered them to stay away from expanding their crypto-related operations. Coinbase claimed that the letters were part of the recently launched Operation Choke Point 2.0.
The complaint stated: “The Pause Letters weren’t a good-faith effort to supervise the crypto-related activities of financial institutions. They were a transparent effort to stop those activities altogether.”
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Furthermore, the statement noted that the letters were “part and parcel of the FDIC’s and other regulators’ scheme to cut off digital-asset firms from necessary banking services.” History Associates requested copies of all the Pause Letters. However, the FDIC declined to grant them. The FDIC claims that sharing these letters will “intrude into the heart of the communications between financial institutions and their regulator.”
Coinbase and US regulators have been at loggerheads over crypto-related policies. The crypto exchange has long sought clear policies to guide the industry.
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