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20/01/25
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FDIC Under Fire: Lawsuit Claims Opaque Crypto Communications Amid Regulatory Scrutiny
The U.S. Federal Deposit Insurance Corporation (FDIC) is facing scrutiny in a lawsuit that alleges it failed to disclose several key documents related to its communications with banks about cryptocurrency operations. A recent report submitted to a federal court in Washington, D.C., indicated that the FDIC may have overlooked additional letters — termed “pause letters” — sent to financial institutions urging them to reconsider their engagement with crypto activities pending ongoing regulatory assessments.
History Associates, the firm representing the plaintiff, contends that allegations have emerged suggesting systematic obstruction of Freedom of Information Act (FOIA) requests by the FDIC, leading to a shortfall of at least 150 relevant documents. The 25 letters provided appear to instruct banks to suspend their crypto endeavors, which many in the industry interpret as part of a broader initiative known as “Operation Chokepoint 2.0,” aimed at limiting banking services for cryptocurrency firms.
Coinbase’s chief legal representative expressed concern over the FDIC’s limited scope in its search for these pause letters, asserting that the agency focused solely on those mentioned in the Office of Inspector General’s report, potentially neglecting other documents. The FDIC maintains that it has fulfilled its obligations under the FOIA by releasing all pertinent documents within the specified timeframe and contends that further letters do not fall under the original request.
In light of these developments, Wyoming Senator Cynthia Lummis has expressed her apprehension, indicating that if the claims of document destruction and obstruction prove valid, it could lead to criminal referrals to the Department of Justice. The legal dispute has its roots in a FOIA request initiated by Coinbase’s CEO, aimed at uncovering communications issued by the FDIC urging banks to pause crypto-related operations. The agency’s prior response included heavily redacted documents, prompting a judicial order for greater transparency in its disclosures.
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