FDIC continues to restrict access to cryptocurrency banking-related documents according to Coinbase's legal director.
In a series of court filings, Coinbase, a leading cryptocurrency exchange, has accused the Federal Deposit Insurance Corporation (FDIC) of obstructing its attempts to obtain records related to Operation Chokepoint 2.0 through Freedom of Information Act (FOIA) requests.
The controversy revolves around the FDIC's alleged refusal to release documents that would help clarify the extent of regulatory and institutional barriers faced by the crypto industry. These records, if made public, could shed light on whether federal agencies influenced banks to deny services to crypto companies, limiting transparency and accountability.
The saga began with a relatively narrow FOIA request made by Coinbase. It took four court orders and six productions for the FDIC to identify and produce all documents responsive to the request. The documents released the following month showed that banks seeking to work with crypto firms "were almost universally met with resistance," according to the agency's Acting Chair.
Coinbase has since demanded sworn testimony from FDIC officials and all agency denial letters from 2020-2024. The crypto exchange aims to expose the scope of alleged anti-crypto banking pressure. To this end, Coinbase has filed an opposition brief and motion for additional discovery in federal court.
The FDIC's stance has been met with criticism. The presiding judge has noted that the agency took an "incredibly narrow illogical view" of Coinbase's FOIA request, initially limiting searches to only documents "shared with the OIG" rather than all pause letters described in the Inspector General's report.
Moreover, the FDIC is accused of systematically obstructing the disclosure of Operation Chokepoint 2.0 records. Internal FDIC policies obtained during the court-ordered information-sharing process show the agency instructs staff to withhold documents covered by FOIA Exemption 8 in full, with no duty to segregate factual from analytical or deliberative material.
Operation Chokepoint 2.0 refers to an alleged systemic effort during the Biden administration to pressure banks and financial institutions into denying or terminating banking services to cryptocurrency firms and politically conservative customers. Critics argue this practice amounts to discriminatory debanking, obstructing crypto businesses’ access to traditional financial services.
The FDIC's appeal-denial letter acknowledges that its decision to withhold documents was based on a determination that they would be exempt, rather than making exemption determinations on a document-by-document basis. This narrow interpretation led the agency to miss numerous responsive documents.
The controversy has prompted political responses, including a planned executive order by former President Trump aiming to protect crypto firms and conservative groups from such alleged discriminatory banking and to require federal investigations into violations of credit and consumer protection laws related to debanking.
In summary, Coinbase’s accusation against the FDIC centers on the agency’s refusal to release potentially revealing documents about Operation Chokepoint 2.0, impeding public understanding and the industry’s ability to respond. The ongoing legal battle promises to shed light on the extent of regulatory pressure on the crypto industry and the transparency of federal agencies' interactions with banks and financial institutions.
- The crypto exchange, Coinbase, has accused the Federal Deposit Insurance Corporation (FDIC) of obstructing its attempts to obtain records related to Operation Chokepoint 2.0 through Freedom of Information Act (FOIA) requests.
- These records, if made public, could shed light on whether federal agencies influenced banks to deny services to crypto companies, limiting transparency and accountability.
- Coinbase has since demanded sworn testimony from FDIC officials and all agency denial letters from 2020-2024, aiming to expose the scope of alleged anti-crypto banking pressure.
- The FDIC's appeal-denial letter acknowledges that its decision to withhold documents was based on a determination that they would be exempt, rather than making exemption determinations on a document-by-document basis.
- The controversy surrounding the FDIC's handling of FOIA requests is not only about the crypto industry; it raises concerns about the transparency of federal agencies' interactions with businesses in the technology, finance, and business sectors.
