Coinbase sues SEC and FDIC: Alleges failure to comply with law in providing documents, attempts to stifle crypto industry

Yesterday, on the 27th, the U.S. exchange Coinbase filed a lawsuit against the U.S. Securities and Exchange Commission and the Federal Deposit Insurance Corporation (FDIC), alleging that the two agencies have not complied with the Freedom of Information Act (FOIA) since 2023, repeatedly denying Coinbase's requests for authorization to disclose relevant documents, and accusing federal agencies of leading the way in excluding the cryptocurrency industry.

Coinbase Sues SEC and FDIC

Coinbase has filed lawsuits against the SEC and FDIC on Thursday, accusing the two agencies of violating the Freedom of Information Act.

According to reports, Coinbase hired consulting firm History Associates last year to submit Freedom of Information Act (FOIA) requests to the SEC and FDIC to review relevant documents; however, these requests were repeatedly denied.

In response, the company has decided to sue both federal agencies to compel them to comply with FOIA and disclose these documents:

Over the past two years, federal financial regulatory agencies including the SEC, FDIC, and the Federal Reserve have used every regulatory tool at their disposal to undermine the digital asset industry. This FOIA lawsuit aims to reveal the roles and actions of these agencies in this unlawful scheme.

History Associates is the plaintiff in this case, with Coinbase listed as an interested party.

SEC Repeatedly Uncooperative in Providing Legal Documents

Request for Disclosure of Ethereum Documents Denied

Last year, History Associates requested access to the SEC's views on Ethereum and ETH, as well as copies and records retained by the SEC related to Ethereum's transition to the Proof of Stake (PoS) consensus mechanism.

The lawsuit stated that the SEC rejected this request in October 2023, claiming it could not locate or identify any information responsive to the request. However, upon appealing this decision, the SEC cited protection under exemption rules for the relevant documents.

In response, History Associates and Coinbase argued that these exemption rules do not apply in this situation and are seeking the release of this information through the current FOIA lawsuit.

Previously, Consensys mentioned in a lawsuit brought against the SEC in April that SEC Enforcement Director Gurbir Grewal approved an investigation into "Ethereum 2.0" in March 2023 to gather information on individuals and entities trading Ethereum, indicating the existence of SEC investigations into Ethereum-related documents.

Consensys Sues SEC, Supports Ethereum, Highlights "Four Reasons" ETH Is Not a Security

The company later stated that the SEC indicated it was concluding its investigation into Ethereum 2.0.

SEC: Will Impact Enforcement Proceedings

Additionally, History Associates also requested the records of two closed investigations, involving Etherdelta founder Zachary Coburn and Enigma MPC, who were sued by the SEC for issuing tokens deemed securities and establishing a cryptocurrency exchange, reaching settlements with the SEC in 2018 and 2020, respectively.

Understandably, the SEC refused these requests citing potential harm to ongoing enforcement actions.

In the lawsuit, Coinbase emphasized:

The SEC's refusal to disclose documents that were resolved and settled years ago has hindered Coinbase's efforts to understand the SEC's legal perspectives on enforcement in the digital asset industry. It is evident that the SEC's actions have violated its FOIA obligations.

FDIC's Efforts to Decimate the Crypto Industry

As for the FDIC, History Associates accuses the agency of attempting to weaken the crypto industry by issuing "suspension of crypto business letters" to multiple banks. This aligns with previous public statements or rumors from the FDIC and the Fed.

Sources: Buyer of Signature Must Agree to Abandon All Crypto Business; FDIC Denies

A 2023 report from the FDIC Inspector General's Office highlighted that the agency from March 2022 to May 2023 issued "suspension letters" to some financial institutions, requesting they refrain from engaging in or expanding crypto-related businesses and providing further information on this matter.

Coinbase stated that these letters are part of "Choke Point 2.0," attempting to exclude digital asset companies from essential banking services:

The suspension letters are not part of so-called "good-faith oversight" but rather a clear intention: an attempt to completely halt crypto activities.

US Cracks Down on Crypto Industry, New York Department of Financial Services Rejects Choke Point 2.0

Meanwhile, History Associates' request to disclose the relevant letters was also rejected by the FDIC:

Revealing the contents of the letters would involve sensitive information about specific banks and would undermine the confidentiality and trust between financial and regulatory agencies.