The SEC and FDIC have blocked Coinbase Global Inc.’s requests for information regarding their dealings with cryptocurrency entities. Based on these, the crypto exchange has taken legal action against these regulatory agencies. The requested documents were allegedly permissible under the Freedom of Information Act (FOIA).
Coinbase Challenges Government Agencies in Court
Coinbase, the leading crypto exchange in the U.S, has filed a lawsuit against the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) for not meeting information requests in confidential crypto cases.
The crypto trading platform sought to acquire federal records regarding the SEC’s classification of Ethereum (ETH) in July 2023 using the FOIA at the exchange’s direction. However, the regulatory body rejected the request in October. Despite Coinbase lawyers from History Associates appealing in January 2024, the SEC denied the request again, saying the records were under protection.
In a twist of events, last week the agency wrapped up its inquiry into Ethereum 2.0, the proof-of-stake network. This indicates that Ethereum is no longer considered a security, a clarity obtained after it was sued by blockchain startup ConsenSys.
Furthermore, Coinbase Chief Legal Officer Paul Grewal said the FDIC also denied inquiries into its communications in which he told banks to stop supporting crypto activities. The complaint said Coinbase wanted “pause letters” from the FDIC for banks to halt digital asset operations.
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 complaint raised worries about the SEC’s changing view of securities laws, causing uncertainty for regulated entities. This could push crypto firms to move their digital asset operations abroad.
Innovation Moves from Coinbase
The prominent crypto exchange has been making impactful developments for its users in the crypto sphere. These moves were directed at gaining an upper hand in the ecosystem. The firm made this move before filing this lawsuit against SEC and FDIC.
Last week, the exchange introduced pre-launch trading for alternative coins on its global and advanced platforms as part of a new effort to cater to its users. This development was in line with the new smart wallet rolled out by the exchange in early June.
This wallet was designed to tackle some of the user experience issues in the cryptocurrency trading world.
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