Coinbase Sues Regulators Over Access to Internal Records

In a significant legal move, Coinbase, the largest cryptocurrency exchange in the U.S., has filed lawsuits against the SEC and FDIC in a Washington, D.C. district court. The exchange claims that these regulators are engaged in a "deliberate and concerted effort" to pressure banks into denying crypto firms access to the federal banking system. A Coinbase spokesperson accused financial regulators of using various tactics to undermine the digital asset industry, which is valued at approximately $2 trillion. The lawsuits stem from Coinbase's attempts to obtain internal records from the SEC and FDIC, which it argues are essential for understanding the regulators' actions. Despite being entitled to this information under the Freedom of Information Act, Coinbase alleges that both agencies have denied its requests, citing concerns that disclosure could jeopardize ongoing investigations. The exchange contends that these denials reflect a coordinated effort to restrict the crypto industry’s access to banking services. Coinbase has highlighted the term "Operation Chokepoint 2.0," used by industry participants to describe what they perceive as a systematic effort by regulators to limit banking access for crypto firms. This sentiment is echoed by other industry figures, such as Erik Voorhees, founder of Shapeshift, who recently reported that his account with fintech firm Revolut was closed due to his crypto-related activities. As Coinbase navigates its ongoing litigation with the SEC over alleged violations of securities laws, the exchange hopes that its lawsuits will clarify the regulatory stance on digital assets. A recent Government Accountability Office report indicates a growing backlog of FOIA requests, surpassing 200,000 in 2022, highlighting the increasing demand for transparency from federal agencies.