Coinbase's Legal Head Claims the FDIC Continues to Evade Disclosure of Crypto Debanking Records
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In a recent court filing, Coinbase, a leading cryptocurrency exchange, has accused the Federal Deposit Insurance Corporation (FDIC) of deliberately obstructing efforts to expose documents related to Operation Chokepoint 2.0. This federal initiative, also known as Operation Chokepoint 2.0 by the industry, is a controversial practice where regulators, including the FDIC, are alleged to have marginalized crypto firms by cutting off banking access.
The controversy stems from the FDIC's practice of withholding bank examination records "in full" without review. Documents released following January court proceedings showed that banks seeking to work with crypto firms were almost universally met with resistance, according to the FDIC's Acting Chair. Coinbase's legal fight has already forced the FDIC to release hundreds of pages revealing apparent efforts to discourage banks from serving crypto companies.
The FDIC has categorically denied requests for Operation Chokepoint 2.0 records without searching. However, the discovery process has uncovered internal FDIC policies that could potentially be in violation of FOIA regulations. The FDIC's appeal-denial letter acknowledges that its decision to withhold Operation Chokepoint 2.0 records was based on a determination that the type of records being requested would be exempt.
Paul Grewal, Coinbase's Chief Legal Officer, has revealed the filing in a series of tweets. The filing reveals it took four court orders and six productions for the FDIC to identify and produce all documents responsive to the relatively narrow pause-letter request. The FDIC took an "incredibly narrow illogical view" of Coinbase's FOIA request, according to the presiding judge.
Coinbase wants sworn testimony from FDIC officials and all agency denial letters from 2020-2024 to expose the scope of alleged anti-crypto banking pressure. The discovery motion asks the court to compel the FDIC to provide sworn testimony from agency officials about their document-handling procedures and to turn over all denial letters sent to other FOIA requesters between 2020 and 2024 when the agency withheld bank examination records.
The opposition brief also reveals that the FDIC's actions are based on a determination that the type of records being requested would be exempt. Grewal tweeted that the FDIC's actions are an attempt to "stonewall our efforts to shed light on the previous administration's Operation Chokepoint 2.0" and that Coinbase "can't and won't stand for it."
This controversy adds to concerns about political bias, regulatory capture, and the stifling of innovation in the crypto sector. The FDIC maintains policies to withhold bank examination records "in full" without review, contributing to the debanking trend where crypto businesses face heightened regulatory scrutiny and are often classified as high-risk clients without clear compliance grounds.
References: 1. Asia Cryptocurrency Market Faces Challenges Due to Operation Chokepoint 2.0 2. Operation Chokepoint 2.0: The Latest Attempt to Squeeze Crypto Firms 3. Operation Chokepoint 2.0: The FDIC's Continued Crackdown on Crypto Banks 4. JPMorgan's Crypto Crackdown: A Response to Operation Chokepoint 2.0?
- The ongoing legal battle between Coinbase and the Federal Deposit Insurance Corporation (FDIC) involves the crypto exchange questioning the agency's alleged obstruction of documents related to the crypto industry's Operation Chokepoint 2.0.
- Coinbase's legal fight has already uncovered potential FOIA regulation violations within the FDIC's internal policies and has led to the release of hundreds of pages revealing efforts to discourage banks from serving crypto companies.
- In a tweet, Coinbase's Chief Legal Officer, Paul Grewal, revealed that the FDIC took an "incredibly narrow illogical view" of Coinbase's FOIA request and that the FDIC's actions are an attempt to "stonewall our efforts to shed light on the previous administration’s Operation Chokepoint 2.0."
- Coinbase has requested sworn testimony from FDIC officials, all agency denial letters from 2020-2024, and turnover of all denial letters sent to other FOIA requesters between 2020 and 2024, aiming to expose the scope of alleged anti-crypto banking pressure.
- This controversy over Operation Chokepoint 2.0 adds to concerns about political bias, regulatory capture, and innovation stifling in the crypto sector, with the FDIC maintaining policies to withhold bank examination records "in full" without review, contributing to the debanking trend in the crypto business.
