Coinbase is launching a new legal offensive against the Securities and Exchange Commission and the Federal Deposit Insurance Corporation to procure documents relating to the agencies’ approaches to crypto regulation, FOX Business has learned.
According to the lawsuits filed Thursday in a Washington, D.C., district court, the U.S.’s largest crypto exchange is suing both regulators to gain access to internal records to shed light on what it describes as a "deliberate and concerted effort by the SEC, FDIC and other financial regulators" to pressure banks to deny crypto firms access to the federal banking system.
"For years, financial regulators – including the SEC, the FDIC, and the Federal Reserve Board – have used every tool at their disposal to try to cripple the digital-asset industry," a Coinbase spokeswoman said in a statement to FOX Business. "We demand transparency from our federal government."
The SEC and the FDIC did not immediately respond to requests for comment.
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The move comes following the exchange’s attempts to retrieve information through the Freedom of Information Act regarding three SEC investigations into crypto firms and entrepreneurs between 2018 and 2024, including its recently closed probe into the Ethereum blockchain network. Coinbase also requested details of so-called "pause letters" sent by the FDIC between March 2022 and May 2023 to a handful of banks asking them to pause any crypto-related activity until it could provide further guidance on the risks associated with it.
The pause letters were revealed following an October report by the FDIC’s Office of the Inspector General detailing the agency’s strategies relating to risks associated with cryptocurrencies.
Coinbase says it was denied access to the requested information by both the SEC and the FDIC, despite being legally entitled to it under the Freedom of Information Act, which allows the public to request access to non-public records from federal agencies.
This is the second time this month that the SEC has been sued for failing to comply with FOIA requests. On June 6, the American Securities Association sued the agency to obtain documents relating to its investigations into record-keeping practices at dozens of Wall Street firms including Morgan Stanley, JPMorgan and Goldman Sachs.
In that case, the ASA was denied access on the basis that it may jeopardize similar investigations and enforcement actions into other firms.
According to Coinbase’s lawsuits, the SEC and FDIC are using similar grounds for denying Coinbase the information it’s seeking, including whether top leadership at the agencies are using coordinated pressure tactics to "choke off" the $2 trillion digital assets industry from the lifeblood of the federal banking system.
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Coinbase references the so-called "Operation Chokepoint 2.0," a colloquial term used by crypto industry participants to refer to what they see as a concerted effort by financial regulators to make it hard or, in some cases, outright deny crypto firms access to banking services they need to exist in the U.S. economy. The "2.0" part is in homage to a 2013 campaign by federal regulators in the Obama administration to deny banking services to so-called "high risk" businesses like payday lenders, which charge high interest for short-term loans.
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Other crypto participants have alleged that financial institutions have restricted or terminated their access for associating with digital assets.
On Wednesday, the founder of the cryptocurrency exchange Shapeshift, Erik Voorhees, took to X to complain that the fintech firm Revolut had shut down his account due to "interacting with crypto."
