• Coinbase has filed a lawsuit against SEC and FDIC for not complying with FOIA.

  • The lawsuit claims aggressive regulatory actions hindered the crypto industry’s banking access.

  • Coinbase seeks information on the SEC’s stance on Ethereum and its regulatory authority.

Coinbase has sued the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC), accusing the agencies of stonewalling public records requests and stifling the crypto industry through aggressive regulatory practices.

Financial regulators have used multiple tools at their disposal to try to cripple the digital-asset industry. @SECGov has claimed sweeping authority, but refuses to provide any rules, let alone consistent or coherent ones. While @FDICgov pressured financial institutions to cut…

— paulgrewal.eth (@iampaulgrewal) June 27, 2024

The filing, submitted to the U.S. District Court for the District of Columbia, requests a court order compelling the release of the requested information. The lawsuit further claims that both agencies have used aggressive regulatory measures to impede the crypto industry’s access to the banking sector. Coinbase also asserts that various federal financial regulators, including the FDIC, SEC, and the Federal Reserve Board, have stifled the digital asset industry over the past two years through stringent regulations.

The lawsuit, filed by consulting firm History Associates Inc. on behalf of Coinbase, seeks to investigate the FDIC’s involvement in potentially questionable regulatory activities. Coinbase’s FOIA requests to the SEC sought details regarding the agency’s stance on Ethereum (ETH) amid a recent lawsuit by blockchain software firm ConsenSys against the SEC.

Last year, Gurbir Grewal, the SEC’s Director of the Division of Enforcement, investigated “Ethereum 2.0,” allegedly targeting Ethereum traders. Although the agency later closed the investigation, Coinbase is seeking clarity on the SEC’s authority in this area. History Associates requested records related to Ethereum’s shift to a proof-of-stake consensus mechanism. However, the SEC denied this request and the subsequent appeal.

Coinbase Chief Legal Officer Paul Grewal criticized the SEC and FDIC, demanding improved transparency in financial regulations. Grewal stated:

“We asked the SEC for documents about closed investigations to shed light on how the SEC views its newfound, sweeping (and unlawful) authority. One of those investigations, which only recently closed, focused on ETH, which the SEC publicly announced is not a security in 2018. And the other investigations have been closed for years. But the SEC stonewalled our requests,”

Grewal also mentioned that the FDIC has rejected requests to provide letters instructing financial institutions to “pause” crypto-related activities.

Coinbase’s legal action against the SEC and FDIC signals a growing rift over the regulation of digital assets. The outcome of this lawsuit could significantly impact how investors are protected in the rapidly evolving crypto market.

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