- FDIC accused of hiding over 150 crypto-related documents in a Coinbase-backed lawsuit.
- Coinbase alleges selective document searches and lack of transparency from the FDIC.
- The case could redefine banking and crypto firm relations, influencing future regulations.
The US Federal Deposit Insurance Corporation (FDIC) is accused of withholding key cryptocurrency-related documents in a Freedom of Information Act (FOIA) lawsuit filed by Coinbase. The lawsuit claims the FDIC failed to disclose numerous “pause letters” advising banks to halt crypto operations.
FDIC Accused of Hiding Crypto Documents
On January 17, a report was filed in a Washington D.C. federal court, accusing the FDIC of omitting over 150 critical documents. Whistleblower claims suggest the FDIC systematically blocked FOIA requests.
The 25 disclosed letters reveal the FDIC asked banks to freeze crypto operations until regulatory reviews were complete. The crypto industry views this as part of “Operation Chokepoint 2.0,” aimed at cutting crypto firms off from banking services.
Coinbase’s Chief Legal Officer Paul Grewal accused the FDIC of selectively searching for letters already identified in earlier reports, ignoring other possible documents. He said fixing the issue would take IT at least a year.
On January 17, the FDIC stated it complied with the FOIA request, reviewing documents from March 2022 to May 2023. It denied any omission of relevant letters and said it was processing additional requests separately.
Senator Cynthia Lummis’ Warning to the FDIC
The case gained attention when Wyoming Senator Cynthia Lummis warned of criminal referrals if allegations of document destruction or obstruction are proven.
The FOIA lawsuit originated from a 2022 request by Coinbase CEO Brian Armstrong, seeking letters sent by the FDIC to banks about crypto operations. The heavily redacted letters provided by the FDIC led to further legal action.
Judge Ana Reyes has ordered IT to produce clearer versions of the documents. Coinbase also hired. History Associates to file additional FOIA requests, which were denied.
This case highlights tensions between the crypto industry and regulators. Its outcome could shape the future relationship between financial institutions and crypto businesses.
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Source: https://thenewscrypto.com/fdic-accused-of-hiding-crypto-documents-in-coinbase-lawsuit/