Coinbase Sues SEC and FDIC for Attempting to Shut Down Crypto Sector

On June 27th, Coinbase filed lawsuits against the SEC and FDIC, accusing them of trying to cripple the crypto industry. 

Coinbase asserts that federal regulators are deliberately trying to cut Bitcoin and crypto companies off from the banking system, likening it to "Operation Choke Point," an Obama-era initiative discouraging banks from working with certain "high-risk" sectors.

The lawsuits claim that both agencies failed to comply with Coinbase's Freedom of Information Act (FOIA) requests, which sought to uncover coordinated efforts to restrict crypto's access to banking services.

Coinbase alleges that for nearly two years, financial regulators, including the SEC, FDIC, and Federal Reserve Board, have used every tool at their disposal to undermine the digital asset industry. The company believes these regulators are pressuring banks to deny crypto firms access to the federal banking system.

"For years, financial regulators – including the SEC, the FDIC, and the 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 to FOX Business. "We demand transparency from our federal government."

Coinbase's FOIA requests aimed to gain access to internal records and correspondence to shed light on these alleged efforts. Despite being legally entitled to this information, Coinbase says the SEC and FDIC denied their requests.

Transparency Demands

The exchange argues that regulators are violating transparency laws to hide the full scope of their crackdown on the crypto industry.

The Coinbase spokeswoman said, "We demand transparency from our federal government." Coinbase retained History Associates Inc. to file the FOIA requests, seeking details on investigations into crypto firms and the so-called "pause letters" sent by the FDIC. 

These letters asked banks to halt crypto-related activities until further guidance was provided on the associated risks.

Ongoing Regulatory Battles

This isn't the first time Coinbase has clashed with regulators. In April 2023, Coinbase sued the SEC to force a response to its petition for rulemaking for the crypto industry. The SEC has not yet introduced crypto-specific regulations, although it has proposed rules that apply to crypto.

Coinbase claims these rules are "ill-fitting" and continues to challenge the SEC's enforcement actions. The SEC sued Coinbase last year for operating its platform without proper registration.