Coinbase sues SEC and FDIC, accusing them of anti-crypto bias

US Marshals partner with Coinbase to manage large cap crypto assetsBrian Armstrong, co-founder and chief executive officer of Coinbase Inc., speaks during an interview at the company's offices in San Francisco, California, U.S. (Getty Images)

In this post:

  • Coinbase has sued the SEC and FDIC for withholding information requested under the Freedom of Information Act, accusing them of anti-crypto bias.
  • Coinbase’s Chief Legal Officer, Paul Grewal, criticized the SEC for claiming authority over crypto without providing clear rules, and the FDIC for pushing banks to avoid crypto.

Coinbase has decided to fight back against what it sees as unjust treatment by financial regulators. The crypto giant has filed two lawsuits under the Freedom of Information Act (FOIA) against the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC).

The basis of these lawsuits? Coinbase claims that these agencies have been stonewalling requests for information that should be available to the public.

Related: Coinbase Submits Closing Brief Opposing SEC’s Petition Denial

Paul Grewal, Coinbase’s Chief Legal Officer, shared a statement on the decision. He accused financial regulators of using their power to harm the digital asset industry. According to him, the SEC has been claiming broad authority over crypto but has failed to provide any clear or consistent rules.

Coinbase sues SEC and FDIC, accusing them of anti-crypto bias
Source: Paul Grewal

Meanwhile, the FDIC has been pushing banks to distance themselves from the crypto sector. This lack of transparency and clear regulation has led Coinbase to demand better from these agencies.

The SEC’s conflicting feelings on Ethereum

Coinbase’s filings reveal some troubling actions by the SEC. In 2018, the SEC publicly declared that Ethereum (ETH) is not a security. This announcement led Coinbase and other crypto firms to invest heavily in Ethereum.

However, in recent years, the SEC’s position seems to have shifted. The current SEC Chair has been evasive when asked directly whether ETH is a security. This has caused major uncertainty in the market.

In early 2023, during a congressional hearing, the SEC Chair dodged questions about ETH’s status. Around the same time, the SEC quietly initiated an investigation into “Ethereum 2.0,” suggesting a new stance that ETH might be a security after all.

Coinbase sues SEC and FDIC, accusing them of anti-crypto bias
Source: Coinbase

This led to a flurry of subpoenas targeting entities associated with Ethereum, causing further confusion and legal battles. Some firms, like Consensys, even sued the SEC seeking clarity on ETH’s status.

Recently, the SEC seemed to reverse course again by approving spot ETH ETFs, which implies that ETH is not a security. Coinbase said this flip-flopping has left the industry in disarray, unsure of what to expect next from the regulators.

FDIC’s pressure on banks

The FDIC hasn’t been any better, according to Coinbase. The FDIC has been sending letters to financial institutions, urging them to halt all crypto-related activities indefinitely. This action was criticized even by the FDIC’s own Office of Inspector General.

The Inspector General warned that such measures could stifle innovation and growth in the crypto space. Despite this, the FDIC has continued to block Coinbase’s requests for information regarding these letters.

Related: Coinbase and Brian Armstrong hit with new lawsuit over illegal securities

The lawsuits filed by Coinbase are a direct response to this lack of transparency. Grewal emphasized that the company is simply asking for documents about closed investigations and other communications that the public has a right to see. The aim is to understand how these agencies are interpreting and enforcing their authority over digital assets.

Jai Hamid

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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