Coinbase, the leading U.S. cryptocurrency exchange, has taken legal action against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) for allegedly blocking its document requests improperly.
The lawsuits, filed under the Freedom of Information Act (FOIA), seek to compel the agencies to disclose internal records and communications related to past inquiries and industry events. Coinbase believes these documents could shed light on potential governmental efforts to discourage traditional financial services from supporting crypto firms, a phenomenon the industry has dubbed "Operation Choke Point 2.0".
Despite Coinbase's FOIA requests in 2023, the SEC and FDIC denied providing all the requested information, citing various exemptions. Coinbase's lawsuit against the SEC revisits a recently concluded case and two past investigations settled in 2018 and 2020, focusing on the agency's scrutiny of Ethereum 2.0 and related matters.
Furthermore, Coinbase seeks to review the "pause letters" sent by the FDIC to banking institutions between March 2 and May 2023, concerning their involvement in crypto activities.
Paul Grewal, Coinbase's chief legal officer, highlighted on social media the regulators' attempts to hinder the digital asset sector using diverse mechanisms. Coinbase's contentions regarding the SEC's purported rule application inconsistencies and the FDIC's alleged pressure on financial entities to sever ties with crypto are not novel but carry weight in potentially strengthening the exchange's legal stance in its ongoing dispute with the SEC regarding securities law compliance.
The upcoming legal proceedings will determine whether the agencies will be compelled to fulfill Coinbase's requests, setting the stage for potential revelations in this unfolding saga. The outcome of these lawsuits could have significant implications for the crypto industry's relationship with U.S. regulators and the transparency of their decision-making processes.
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Could this set a precedent that impacts the entire crypto industry? What are your thoughts?