KEY POINTS
- Coinbase noted that Gensler made a 'contradictory congressional testimony'
- The crypto exchange giant also sued the FDIC for its alleged efforts to de-bank crypto firms
- Coinbase has been pushing the SEC for regulatory clarity or new rules dedicated for the industry
Cryptocurrency exchange giant Coinbase sued the U.S. Securities and Exchange Commission (SEC) Thursday, accusing the Wall Street regulator of seeking to "cripple" and ultimately "destroy" the rising digital assets industry.
Coinbase said in its filing that the SEC consistently refused to provide a clear view of the application of securities laws to cryptocurrencies. "The agency's latest position – that it has sweeping authority over the vibrant and rapidly expanding digital-asset industry – has no basis in the securities laws and has never coherently been explained by the agency. Instead, the SEC has waged a scorched-earth enforcement war on digital-asset firms, in conjunction with efforts by other financial regulators to de-bank crypto firms, is designed to cripple the digital-asset industry," it said.
The crypto exchange also noted how SEC Chair Gary Gensler made a "contradictory congressional testimony" even if he declared three years earlier that the regulatory agency "lacks authority" to regulate exchanges such as Coinbase.
Coinbase, which is one of the world's top-performing crypto exchanges by trading volume, argued that the SEC's actions toward the sector cannot be considered regulation. "It is a purposeful effort to destroy an industry by demanding the impossible and prosecuting companies that fail to achieve it."
The crypto company also filed a lawsuit against the Federal Deposit Insurance Corporation (FDIC), saying the regulator deliberately sought to pressure financial institutions "into cutting off digital-asset firms from the banking system" when it sent "Pause Letters" that asked the institutions to halt crypto-related activities indefinitely in October.
Paul Grewal, Coinbase's chief legal officer, wrote on X (formerly Twitter) after the filing was lodged that financial regulators in the country have utilized various tools to cripple the industry. "Today we demand better from our financial regulators," he said.
Financial regulators have used multiple tools at their disposal to try to cripple the digital-asset industry. @SECGov has claimed sweeping authority, but refuses to provide any rules, let alone consistent or coherent ones. While @FDICgov pressured financial institutions to cut…
— paulgrewal.eth (@iampaulgrewal) June 27, 2024
The latest lawsuits from Coinbase were lodged more than a month after the SEC told the court that the crypto exchange can't force it to create new rules specifically for the digital assets sector.
It insisted that existing regulations were enough to monitor the industry and that forcing it into new rulemaking activities would limit the regulatory agency's "choices regarding competing priorities."
Coinbase has been on a mission to push the SEC into clarifying regulations for crypto firms or establishing rules dedicated to the burgeoning sector. It has also urged other players and stakeholders in the industry to support candidates backing the digital assets space.
Meanwhile, the SEC's legal woes have been piling up in recent months. Late in May, a judge who dismissed the regulator's case against Debt Box ordered the SEC to pay roughly $1.8 million in legal fees and other costs after the judge found that some SEC lawyers provided "false or misleading" statements.
