Coinbase accuses FDIC of hiding cryptocurrency surveillance documents

Coinbase accuses the Federal Deposit Insurance Corporation (FDIC) of obstructing access to key documents related to its Freedom of Information Act (FOIA) request about the financial regulator’s failure to fair to target crypto companies.

The cryptocurrency exchange alleges that the FDIC is withholding important information despite a court ruling requiring its disclosure.

Coinbase Challenges FDIC Over Allegedly Covered ‘Cease and Desist’ Letters

On January 17, Paul Grewal, Coinbase’s Chief Legal Officer, criticized the FDIC’s handling of its FOIA requests. Controversy surrounds letters FDIC sent to banks related to cryptocurrency services.

These letters allegedly advised financial institutions to suspend cryptocurrency operations until the agency completed regulatory inspections. Although Coinbase was successful in obtaining some documents through legal action, Grewal claims that the FDIC intentionally limited the scope of its document search.

He suggested there could be additional cease-and-desist letters, but the agency focused only on those explicitly mentioned in the previous report. The request for more extensive research was denied, with the FDIC reporting that meeting this request would take a year or more.

“Without telling us or the Court, the FDIC limited its search for cease-and-desist letters to only those letters ‘contained’ in the report, so additional cease-and-desist letters may exist . When we asked them to correct the ‘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, and emphasized that Coinbase remains committed to exposing the full scope of the agency’s interference in hindering cryptocurrency innovation.

Grewal also highlighted whistleblower allegations of misconduct within the FDIC. The allegations include improperly labeling documents, refusing to search specific databases, and improperly using tax dollars to investigate individuals, including himself. When Coinbase sought clarification on these issues, the FDIC was reportedly unresponsive.

This situation has attracted the attention of lawmakers. Senator Cynthia Lummis recently criticized the FDIC, accusing the agency of trying to cover up “Operation Chokepoint 2.0,” a term used to describe efforts to target cryptocurrency companies through regulatory pressure.

Lummis has warned that the agency may be destroying documents related to these incidents. The congresswoman called for the immediate protection of all documents related to digital assets.

“The FDIC is attempting to conceal Operation Chokepoint 2.0 and the FDIC must secure all documents related to digital assets immediately,” congresswoman stated.

In response to these challenges, Coinbase plans to expand its FOIA complaints to address what it sees as FDIC violations. The exchange remains steadfast in its mission to hold the agency accountable. Grewal asserted that Coinbase will not give up, declaring that the company is ready to continue the fight.

“I won’t speculate on how the Court or Congress will react. But if the FDIC thinks they can win a showdown with Coinbase or the industry, they clearly underestimate us and our commitment to the rule of law. We won’t go anywhere. And neither do our lawyers,” Grewal conclude.