Cryptocurrency exchange Coinbase has taken legal action against the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC), accusing the agencies of improperly blocking its requests for documents under the Freedom of Information Act (FOIA).
Seeking Clarity on Crypto Regulation
Through an intermediary, Coinbase is seeking to obtain written communications from the SEC regarding closed investigations into how the agency determines which digital assets qualify as securities. This includes cases involving Ethereum's ether (ETH) token, as well as past enforcement actions against platforms like EtherDelta and Enigma MPC.
Coinbase argues that these documents could shed light on the SEC's "newfound, sweeping (and unlawful) authority" in regulating the crypto industry. The exchange contends that the SEC has denied its requests, citing exemptions to protect ongoing law enforcement efforts, even though some of the cases have been closed for years.
Challenging the FDIC's "Pause Letters"
In a parallel move, Coinbase's contractor, History Associates, is suing the FDIC over the agency's so-called "pause letters" sent to financial institutions. These letters reportedly asked firms to indefinitely suspend their crypto-related activities, a move that the FDIC's own Inspector General criticized for potentially limiting "financial institution innovation and growth in the crypto space."
Coinbase argues that these pause letters are part of a "deliberate and concerted effort" by the FDIC and other regulators to pressure financial institutions into cutting off digital asset firms from the banking system.
Ongoing Legal Battles with U.S. Regulators
This latest legal challenge adds to Coinbase's growing list of disputes with U.S. financial regulators. The exchange is currently embroiled in a separate lawsuit against the SEC over the agency's allegations that Coinbase operates an illegal exchange trading unregistered securities.
Coinbase has also sued the SEC seeking a court order to force the regulator to provide clear guidance on what constitutes a digital asset security. Additionally, the exchange previously backed a lawsuit against the U.S. Treasury Department over sanctions on the crypto mixer Tornado Cash, although that case was ultimately unsuccessful.
Navigating the Regulatory Landscape
Coinbase's legal actions underscore the exchange's determination to navigate the complex and often ambiguous regulatory environment surrounding cryptocurrencies in the United States. By challenging the SEC and FDIC's document withholding, Coinbase aims to shed light on the agencies' decision-making processes and the criteria they use to classify digital assets.
The outcome of these lawsuits could have significant implications for the broader crypto industry, as they may provide greater transparency into the regulatory landscape and potentially influence the future direction of crypto-related policies in the U.S.
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