On January 6, 2025, Paul Grewal, Coinbase’s Chief Legal Officer, used X as a platform to carry on the conversation about the ongoing legal dispute with the Federal Deposit Insurance Corporation (FDIC). The FDIC had acknowledged sending letters instructing banks to temporarily halt services for clients connected to cryptocurrency.
In a claim, Grewal alleged that the Federal Deposit Insurance Corporation (FDIC) was concealing crucial details, such as court-mandated documents, by invoking a FOIA exemption. This action, according to Grewal, was an effort to hide their questionable activities.
Coinbase took legal action against the Federal Deposit Insurance Corporation (FDIC), aiming to compel them to disclose documents concerning the supposed ‘pause letters.’ These documents were originally withheld by the FDIC. The lawsuit was filed under the Freedom of Information Act (FOIA).
In a move to protect sensitive information, the FDIC utilized Exemption 8 of the Freedom of Information Act to conceal large portions of the letters. The reasoning behind this was that disclosing all details might negatively impact the relationship between banks and regulatory bodies. These letters, exchanged from 2022 to 2023 among several financial institutions, essentially ordered them to halt services for clients dealing with cryptocurrencies temporarily.
It remains unclear whether the FDIC’s anticipated guidance on this matter was eventually released. Grewal expressed doubt over the necessity of these redactions, suggesting that they may have been made to conceal “Operation Choke Point 2.0,” an alleged collaborative initiative by U.S. financial regulators aimed at restricting services for crypto clients and certain targeted groups.
Some people argue that the FDIC’s actions can be seen as a strong effort aimed at pushing banks away from the cryptocurrency market.
Previously, attorney John E. Deaton, a strong opponent of Operation Choke Point 2.0, urged an investigation and warned that these actions might create significant issues for the ongoing Ripple case.
He expressed concern that unappointed authorities might impose unfair restrictions on essential financial services. Such actions could potentially damage not just the crypto industry, but also religious organizations and individuals from African nations. This topic has been a frequent subject in broader discussions about the future of digital currencies and financial control.
The “halt instructions” in question were advisories dispatched by the Federal Deposit Insurance Corporation (FDIC) to financial establishments, advising them to cease offering services to clients dealing with cryptocurrencies. These advisories urged banks to postpone these services until they received additional guidance from the FDIC, however, it’s uncertain if such counsel was ever given. It’s worth noting that these advisories were not initially considered confidential until September 2022, raising questions about the FDIC’s growing tendency towards secrecy.
Despite portions of the information being concealed, some fresh details emerged on January 4, 2025, that appeared to contradict the FDIC’s statements regarding potential risks from data sharing. These occurrences continue to spark curiosity about the reasons behind the FDIC’s actions and their approach to regulating cryptocurrency.
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2025-01-08 21:41