FDIC Accused of ‘Stonewalling’ Crypto Debanking Docs—Coinbase Legal Chief Fights Back
The FDIC's paper fortress just got stormed by crypto's legal cavalry.
Coinbase's top lawyer slams regulators for allegedly blocking transparency around crypto debanking—while traditional banks get bailouts and blind eyes.
Regulatory Dodgeball
Behind the scenes: Federal agencies might be playing keep-away with documents that could expose biased treatment against digital asset firms. No subpoena? No problem—just bureaucratic inertia.
The Irony Department
Meanwhile, the same regulators who missed 2008’s Lehman-sized warning signs now scrutinize crypto compliance like Talmudic scholars. Priorities!
Coinbase’s legal team isn’t waiting for permission. Expect lawsuits to cut through the red tape faster than a Bitcoin maxi sells during a 10% dip.
What is Operation Chokepoint 2.0?
The FDIC controversy has heightened concerns that regulators have marginalized crypto firms by cutting off banking access, which the industry calls "Operation Chokepoint 2.0.”
Coinbase's opposition brief details how the FDIC's appeal-denial letter acknowledged that its "decision to withhold was based upon a determination that the type of records being requested WOULD be exempt, rather than making exemption determinations on a document-by-document basis."
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.
Internal FDIC policies obtained during the court-ordered information-sharing process show the agency instructs staff that any document covered by FOIA Exemption 8 should be "withheld in full" with "[n]o duty to segregate factual from analytical or deliberative material."
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 took an "incredibly narrow illogical view" of Coinbase's FOIA request, according to the presiding judge, initially limiting searches to only documents "shared with the OIG" rather than all pause letters described in the Inspector General's report.
This narrow interpretation led the agency to miss numerous responsive documents.
During January court proceedings, the FDIC admitted it had no litigation holds or policy for preserving records in FOIA cases, and 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's legal fight has already forced the FDIC to release hundreds of pages revealing apparent efforts to discourage banks from serving crypto companies.
