Coinbase has accused the Federal Deposit Insurance Corporation (FDIC) of blocking access to crucial documents tied to its Freedom of Information Act (FOIA) requests about the financial regulator’s overreach in targeting crypto firms.
The crypto exchange alleges that the FDIC is withholding key information despite a court ruling requiring disclosure.
Coinbase Challenges FDIC Over Alleged Hidden ‘Pause Letters’
On January 17, Paul Grewal, Coinbase’s Chief Legal Officer, criticized the FDIC’s handling of its FOIA requests. The controversy centers on the letters the FDIC issued to banks involved in cryptocurrency-related services.
These letters reportedly advised financial institutions to halt their crypto operations until the agency completed regulatory reviews. While Coinbase succeeded in obtaining some of them through legal action, Grewal claims that the FDIC deliberately limited its document search.
He suggested additional pause letters may exist, but the agency confined its efforts to those explicitly mentioned in a previous report. Requests for a broader review were denied, with the FDIC reportedly stating that fulfilling the request would take a year or more.
“Without telling us or the Court, FDIC limited their search for pause letters to only those ‘contained’ in the report — so other pause letters may exist. When we asked them to fix their supposed “reasonable interpretation” and stop playing word games, they told us it would take at least a year,” Grewal stated.
Grewal described the situation as part of a larger pattern of obstructive behavior. He accused the FDIC of failing to comply with the court’s directive. He also emphasized that Coinbase remains committed to uncovering the full scope of the agency’s involvement in stalling crypto innovation.
Grewal also highlighted whistleblower allegations of misconduct within the FDIC. These claims include improper document labeling, refusal to search specific databases, and the misuse of taxpayer funds to investigate individuals, including himself. When Coinbase sought clarification on these issues, the FDIC reportedly did not respond.
This situation has drawn the attention of lawmakers. Senator Cynthia Lummis recently criticized the FDIC, accusing it of attempting to conceal “Operation Chokepoint 2.0,” a term used to describe alleged efforts to target crypto firms through regulatory pressure.
Lummis warned that the agency might be destroying documents related to these incidents. The lawmaker called for the immediate preservation of all materials related to digital assets.
“The FDIC is attempting to hide Operation Chokepoint 2.0 and the FDIC must preserve all documents related to digital assets immediately,” the lawmaker stated.
In response to these challenges, Coinbase plans to expand its FOIA complaints to address what it sees as FDIC violations. The exchange remains resolute in its mission to hold the agency accountable. Grewal affirmed that Coinbase will not relent, stating that the company was fully prepared to continue the fight.
“I will not presume to speak for the Court or Congress. But if FDIC thinks they can win in a staring contest against Coinbase or the industry, they clearly underestimate us and our commitment to the law. We’re not going anywhere. And our lawyers aren’t going anywhere,” Grewal concluded.
