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Decoding the Lawsuit: Coinbase's Fight for Information

Levin Law | 7.3.2024

The cryptocurrency market has been active in early 2024, highlighted by Bitcoin surpassing $64,000 on February 28th, marking its highest point of the year so far. Throughout the entire crypto market, there has been a strong upward trend in prices, particularly gaining momentum in recent weeks. 

As of late, Coinbase has filed a lawsuit against both the U.S. Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC). This shows a significant escalation in the cryptocurrency industry’s battle for regulatory clarification. 

Coinbase vs The SEC & FDIC 

Coinbase has filed a lawsuit against both the SEC and the FDIC requesting clarification on regulation associated with cryptocurrency. Coinbase asked the SEC if Ethereum was considered security. They did not receive an answer. Coinbase also asked the FDIC for clarification on pause notices claiming that the crypto industry is being blocked from the banking system in the United States.

FOIA Requests 

The Freedom of Information Act (FOIA), was enacted in 1966 and generally provides that any person has the right to request access to federal agency records. The FOIA is often referred to as the law to keep citizens informed about their government. 

All federal agencies are required to disclose any information requested under the FOIA unless it is in one of nine exemptions that protect interests. If the information you want is not publicly available, you can submit a FOIA request to the agency’s FOIA Office. The request simply must be in writing and reasonably describe the records you seek. 

Most federal agencies now accept FOIA requests electronically, including by web form, e-mail, or fax. See the list of federal agencies for details about how to make a request to each agency and any specific requirements for seeking certain records. 

The Reason Behind Coinbase’s Lawsuit 

Coinbase sued financial regulators for their failure to disclose information about past investigations into the cryptocurrency market and attempting to block the crypto industry from accessing the bank services. Regulators have fought to reshape the crypto industry by treating digital asset exchanges like traditional financial institutions while pushing out companies like Coinbase.

Why We Need the SEC & FDIC 

The SEC regulates the securities industry, protecting investors, maintaining fair markets and facilitating capital formation. 

The SEC protects investors by enforcing federal securities laws to ensure that investors are treated fairly and have access to information about investments. 

The SEC also provides resources to help investors evaluate their investment choices. They maintain fair market values by overseeing securities exchanges, securities brokers and dealers, investment advisors, and mutual funds to promote fair dealing, the disclosure of important market information, and to prevent fraud. 

The purpose of the FDIC is to protect the depositors of insured banks from losing their deposits if their bank fails. It maintains stability and public confidence in the US financial system.

Evolving Regulations and Investor Protection 

In the past cryptocurrency has often been synonymous with a lack of regulation. This is rapidly changing as the governments all over the world have begun considering rules associated with digital currencies. As regulations evolve, they are implementing new procedures to help protect investors. Investor protection will increase fraud prevention. 

Cryptocurrency markets are still relatively new and have been associated with many frauds and scams. SEC enforcement could deter fraud and protect investors from bad actors. By employing disclosure standards to regulate crypto markets under securities laws, the SEC is hoping to make these enterprises provide more accurate and thorough information to the public, enabling investors to make more informed decisions.  

Coinbase Craze Got You Confused? Levin Law, P.A. Speaks Crypto 

Cryptocurrency is still extremely new and due to the lack of regulation is relatively hard to understand. It is imperative that you protect your crypto and digital investments after the recent glitches and hacking associated with them.

Bitcoin, Ethereum, and other cryptocurrencies have transformed the financial sector, yet they bring substantial risks. The rapid rise of digital currencies and investments is startling, especially considering the emerging technology. 

The absence of oversight has led to severe consequences. Security breaches, fraudulent activities, and market volatility have collectively resulted in billions of dollars in losses within the crypto space. 

Our team at Levin Law, P.A., defends those who have suffered losses of cryptocurrency due to another party's negligence or incompetence. Our team of attorneys provide aggressive yet professional representation ensuring our clients receive the best outcome for their situation. Contact us today for your free consultation

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