Coinbase alleges the FDIC is deliberately blocking access to documents related to Operation Chokepoint 2.0, a regulatory effort restricting banks from serving crypto firms, and has filed motions to compel transparency and additional discovery in federal court.
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Coinbase’s legal filings reveal systematic FDIC obstruction in disclosing “pause letters” that halted crypto banking activities.
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The FDIC’s narrow interpretation of FOIA requests delayed document production despite multiple court orders.
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Paul Grewal, Coinbase’s Chief Legal Officer, emphasizes the need to expose these historic regulatory misdeeds to prevent recurrence.
Coinbase challenges FDIC’s obstruction of Operation Chokepoint 2.0 documents, pushing for transparency on crypto banking restrictions. Read the latest updates now.
What Is Operation Chokepoint 2.0 and Why Is Coinbase Fighting the FDIC?
Operation Chokepoint 2.0 refers to alleged regulatory actions by the FDIC aimed at pressuring banks to avoid crypto-related businesses. Coinbase’s lawsuit accuses the FDIC of withholding critical documents under FOIA, obstructing transparency about these “pause letters” that ordered banks to halt crypto services. This legal battle highlights concerns over regulatory overreach and its impact on the crypto industry.
How Has the FDIC Responded to Coinbase’s FOIA Requests?
The FDIC initially took an incredibly narrow and illogical view of Coinbase’s FOIA requests, limiting searches to documents shared with the Office of Inspector General. This approach caused the agency to miss numerous responsive records. Despite six document productions and four court orders, the FDIC delayed full disclosure, citing FOIA Exemption 8 to withhold documents in full without segregating factual content.
What Evidence Has Coinbase Uncovered About FDIC’s Crypto Banking Policies?
Internal FDIC policies obtained through court-ordered discovery reveal instructions to staff to withhold entire documents covered by FOIA Exemption 8. Additionally, documents show that banks attempting to work with crypto firms faced near-universal resistance. Coinbase’s filings have forced the FDIC to release hundreds of pages exposing these efforts to marginalize crypto companies.
What Are Coinbase’s Next Legal Steps Against the FDIC?
Coinbase has filed a motion for additional discovery, requesting sworn testimony from FDIC officials about their FOIA practices and all denial letters sent between 2020 and 2024 related to bank examination records. The goal is to uncover the full extent of regulatory obstruction and ensure accountability for these historic misdeeds.
| Document Type | Number Produced | Initial FDIC Search Scope |
|---|---|---|
| Pause Letters | Hundreds of pages | Limited to OIG-shared documents |
Frequently Asked Questions
What is the significance of Operation Chokepoint 2.0 for crypto firms?
Operation Chokepoint 2.0 represents regulatory efforts to restrict banks from serving crypto companies, significantly impacting their access to financial services and growth opportunities.
Why is Coinbase suing the FDIC over FOIA requests?
Coinbase alleges the FDIC is unlawfully withholding documents related to crypto banking restrictions, obstructing transparency and accountability under the Freedom of Information Act.
How Does Coinbase Plan to Expose FDIC’s FOIA Practices?
Coinbase seeks court orders to compel the FDIC to provide sworn testimony on its FOIA handling and produce all denial letters related to bank examination records. This strategy aims to reveal systemic obstruction and ensure regulatory transparency.
What Impact Could This Legal Battle Have on Crypto Regulation?
Successful disclosure could set a precedent for increased regulatory accountability and protect crypto firms from covert banking restrictions, fostering a more transparent and fair financial ecosystem.
Key Takeaways
- Coinbase challenges FDIC’s obstruction: The exchange accuses the FDIC of deliberately withholding documents on crypto banking restrictions.
- Operation Chokepoint 2.0 exposed: Legal filings reveal efforts to pressure banks against serving crypto firms.
- Transparency and accountability: Coinbase pushes for sworn testimony and full disclosure to prevent future regulatory overreach.
Conclusion
The ongoing legal dispute between Coinbase and the FDIC highlights critical issues surrounding regulatory transparency and the treatment of crypto firms by traditional financial institutions. By challenging the FDIC’s FOIA practices, Coinbase aims to ensure that historic regulatory misdeeds like Operation Chokepoint 2.0 are fully exposed and never repeated. This case underscores the importance of clear, fair policies to support innovation in the crypto sector while maintaining trust and accountability.
