One of the largest bitcoin exchanges, Coinbase, you know, is not particularly thrilled with two big U. S. bodies – Securities and Exchange Commission and the Federal Deposit Insurance Corporation. Here’s why.
The Big Complaint
Coinbase chose to employ the services of a research firm known as History Associates Inc., which is now suing the SEC and the FDIC. They say these agencies are a little bit of playing a ‘game of cat and mouse’ with key documents. Here they claim that any such documents should be provided under a thing called the Freedom of Information Act (FOIA). FOIA is like a key that allows the public to open a few files so as to be able to know what is really happening behind the scenes.
What’s the Fuss About?
Well, you might ask, what documents are we referring to here? First of all, Coinbase wants to know how the SEC defines which digital assets are security, actually. Securities can be compared to particular forms of assets, and various regulations concerning them can be quite detailed. In particular, they are interested in the Ethereum cryptocurrency – ether (ETH). The SEC has recently completed its assessment of what is known as “Ethereum 2. 0,” so Coinbase reckons now is as good a time as any to stick their spoon into this particular bowl.
But that’s not all!
Zachary Coburn and EtherDelta: Alleging that EtherDelta was engaged in the sale of “digital asset securities.” the SEC said in 2018.
Enigma MPC: This blockchain startup raised $45 million through the sale of tokens called ENG in 2017, which the SEC later deemed as unregistered securities.
The Pause Letters Mystery
Over at the FDIC, Coinbase is interested in some ‘pause letters. ‘ They are letters in which the FDIC allegedly wanted financial firms to cool it or stop with the crypto stuff. It is as if the FDIC came out and said “folks, let’s tone down on some of these crypto things a bit”.
Coinbase’s Legal Jousting
The anger became apparent when Lior Golan, the Chief Legal Officer of Coinbase called Paul Grewal to vent on social media. He said they wanted documents about closed investigations to understand how the SEC is exercising its power. He was quick to note that in 2018 the SEC stated that ETH is not a security. Thus, why the silence now?
The SEC, however, is not budging an inch on that superstition. They have rejected these document requests, by citing something under the FOIA called ‘Exemption 7A’. They include an exemption that prevents information from being disclosed if disclosing it can compromise the workings of law enforcement.
There were no responses from the agencies to the proposed framework.
Till date, there is no comment from spokespeople of both the SEC and FDIC over these lawsuits. Similarly when someone tells one of the cats to play fetch with a ball, don’t expect it to happen!
More Legal Drama
This is not the first time Coinbase will be dealing with the U. S regulators in regarding the issue. They are already on a collision course with the SEC over claims that Coinbase is operating an unlawful exchange, trading unregulated securities. This legal fight is perhaps the largest in the blockchain and cryptocurrency business and may affect the future of digital assets in the United States.
Moreover, Coinbase has even provided funding to Cases against the U. S government in the past. Last year, they supported a group of investors and developers who claimed that the U. S. Treasury Department was wrong in targeting a crypto mixer known as Tornado Cash. While this particular trial did not turn out in their favor, they did not let the matter rest there and they appealed the decision.
