Coinbase Picks Fresh Legal Battle With US SEC and FDIC

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As a long-term crypto investor with a background in finance and law, I find Coinbase’s latest legal actions against the SEC and FDIC both alarming and inspiring. Alarming because it highlights the ongoing regulatory uncertainty that plagues our industry, stifling innovation and growth. Inspiring because Coinbase is standing up for itself and the broader crypto community by challenging the status quo.

As a crypto investor, I’d put it this way: “Coinbase, the cryptocurrency exchange where I hold some investments, has recently filed lawsuits against both the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Commission (FDIC).”

Coinbase claims

Based on information from the trading platform, it appears that certain government agencies are intentionally pushing crypto companies out of the financial system. Specifically, financial regulators are reportedly putting pressure on banks to deny services to these cryptocurrency firms.

As a crypto investor, I’ve noticed that financial regulators have employed various strategies to curb the digital asset industry. The Securities and Exchange Commission (SEC) has asserted broad powers but failed to establish clear-cut guidelines, let alone ones that are consistent or logically sound. According to Coinbase’s Chief Legal Officer, Paul Grewal, he expressed this sentiment in a post on social media platform X.

To gain insight into the SEC’s perspective on its expanded, allegedly overreaching (and potentially unlawful) power, we requested access to their archived documents concerning closed investigations. Among these cases was one that wrapped up not long ago, centering around ETH, which the SEC declared in 2018 was not classified as a security. Additionally,…— paulgrewal.eth (@iampaulgrewal) June 27, 2024

As an analyst, I’ve observed that the FDIC, under Grewal’s leadership, has made it a priority to prevent cryptocurrencies from integrating with the traditional banking system. This stance was evident in the past when Custodia Bank sought a Master Account from the Federal Reserve, which would have enabled the crypto bank to provide fundamental banking services. However, the application was rejected by the regulatory body.

According to Paul Grewal’s statement, the company had inquired with the SEC about cases that could grant it the power it currently holds. He mentioned that the SEC has yet to address these inquiries, including one related to the recent Ethereum securities investigation which was recently concluded.

FDIC refuses to play ball

In addition to the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC) is accused of breaching the Freedom of Information Act (FOIA) by not disclosing the letters they sent to financial institutions, requesting them to indefinitely halt crypto-related transactions.

As a researcher, I found that the FDIC’s actions were identified as problematic by their internal watchdog, the Office of Inspector General. These actions allegedly posed a risk of unintentionally stifling financial innovation and expansion in the cryptocurrency sector.

As a crypto investor, I’m keeping a close eye on the latest development with Coinbase. Recently, another lawsuit has been filed against them by the SEC, adding to the two ongoing cases. The most significant one concerns the securities tokens traded on their platform.

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2024-06-27 18:24