Coinbase Launches Legal Battle Against SEC and FDIC, Defending Crypto Industry’s Future

Coinbase yesterday launched Freedom of Information lawsuits against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) in an attempt to access key documents relating to the regulation of the crypto industry.

In the lawsuits Coinbase alleges that the SEC has been given unlawful, sweeping powers to regulate the digital assets industry, but has never publicly explained its position or given meaningful guidance to the industry, preferring to conduct “government in the shadows”.

Coinbase also says that the FDIC has sought to apply regulatory pressure to exclude the digital asset industry from the banking system by sending “pause letters” to an unknown number of financial institutions requesting that they pause the provision of services to the crypto industry indefinitely. 

The exchange says these requests were sent despite the FDIC’s own Inspector General warning that this could “inadvertently limit financial institution innovation and growth in the crypto space.”

Coinbase has previously requested both regulators provide documents under the Freedom of Information Act (FOIA) but both have refused. The lawsuits are an attempt by Coinbase to get the US District Court for the District of Columbia to compel the regulators to make their decision making process public.

Related: Coinbase APAC Chief Calls for Clearer Regulations in Australia, Cites Innovation Potential 

Regulators Trying To Destroy Crypto Industry, Claims Coinbase

Coinbase’s Chief Legal Officer, Paul Grewal, took to X to explain why the exchange decided to launch these lawsuits, saying:

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 off the industry from the banking system. Today we filed lawsuits under the Freedom of Information Act for requests we made over a year ago seeking important information to which we, and the public, are entitled.

Paul Grewal, Chief Legal Officer at Coinbase

Coinbase says if the regulators disclosed these documents, many of which relate to legal cases that were concluded several years ago, both industry players and the crypto investing public would have a better understanding of how the industry is being regulated. But regulators are seemingly loathe to provide this clarification:

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…The SEC’s stonewalling violates its FOIA obligations.

Coinbase complaint against the SEC

Related: Coinbase vs. SEC: A Battle for Crypto Supremacy 

In its filing against the SEC, Coinbase also explicitly accused the regulator of intentionally trying to destroy the digital assets industry by studiously refusing to provide clear rules and then arbitrarily prosecuting companies it says has broken those rules:

This is not regulation. It is a purposeful effort to destroy an industry by demanding the impossible and prosecuting companies that fail to achieve it. The SEC’s new, opaque, and shifting view of the securities laws deprives regulated parties of the fair notice demanded by due process, leaving them to guess whether the SEC might view their activities as securities transactions and decide to subject them to investigation, prosecution, and backward-looking penalties.

Coinbase complaint against the SEC