Crypto exchange Coinbase
What Happened: The company is seeking a court order to compel these agencies to fulfill the information requests.
In the lawsuits filed in the U.S. District Court for the District of Columbia on Thursday, Coinbase accuses the federal financial regulators of attempting to hinder the crypto industry's access to the banking sector.
"For nearly two years, a wide array of federal financial regulators - including the Securities and Exchange Commission, the FDIC, and the Federal Reserve Board - have used every regulatory tool at their disposal to try to cripple the digital-asset industry," the complaint against the FDIC states.
"This FOIA lawsuit seeks to bring to light the FDIC's role in that unlawful scheme."
The FOIA requests, managed by consultant firm History Associates Inc., sought information from the SEC regarding the agency's perspective on Ethereum, specifically its transition to a proof-of-stake consensus mechanism.
These requests were denied, with the SEC later rejecting their appeals.
Additionally, requests for records related to investigations of Zachary Coburn and Enigma MPC were also turned down, with the SEC citing potential harm to ongoing enforcement proceedings.
"The SEC's rationale for withholding documents from investigations that concluded in settlements years ago is tailor-made to frustrate the legitimate purposes for which Coinbase sought the Coburn and Enigma MPC documents in the first place - to understand the view of the law that underlies the SEC's enforcement blitzkrieg against the digital-asset industry," Coinbase argued in its complaint.
"The SEC's stonewalling violates its FOIA obligations."
In its complaint against the FDIC, Coinbase highlighted the agency's "pause letters," which were issued between March 2022 and May 2023 to financial institutions, advising them to halt expanding crypto-related activities until further information was provided.
These letters were described as part of "Operation Choke Point 2.0," aimed at stifling crypto firms' access to banking services.
"The Pause Letters weren't a good-faith effort to supervise the crypto-related activities of financial institutions," the complaint stated.
"They were a transparent effort to stop those activities altogether - 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 these pause letters, but the FDIC denied the request, arguing that disclosing the letters would reveal sensitive communications between banks and their regulator.
Why It Matters: This is not Coinbase's first legal confrontation with regulators.
In April 2023, the exchange sued the SEC to compel the agency to respond to its petition for rulemaking for the crypto industry, highlighting ongoing tensions over regulatory clarity.
Coinbase had initially requested the SEC to establish a formal rulemaking process for the crypto sector in July 2022.
Although the SEC has proposed some rules impacting crypto, the industry has criticized the regulator's approach as "regulation by enforcement."
The SEC has taken enforcement actions against various crypto platforms, including a lawsuit against Coinbase for operating without proper registration.
SEC Chair Gary Gensler maintains that most cryptocurrencies should be regulated as securities, while the industry calls for clearer regulatory guidance.
