Coinbase Secures FDIC Unredacted Files in Operation Chokepoint 2.0 Probe

After months of legal proceedings, American cryptocurrency exchange Coinbase has obtained additional unredacted documents from the Federal Deposit Insurance Corporation (FDIC).

The release is part of the company’s ongoing investigation into allegations surrounding “Operation Chokepoint 2.0”. It also follows a legal battle over Coinbase’s Freedom of Information Act (FOIA) requests.

Coinbase Exposes FDIC’s Crypto Skepticism: What’s in the ‘Pause Letters’?

The FDIC disclosed two more pages of previously withheld documents, referred to as “pause letters.”

These documents reveal that the FDIC advised banks to halt activities involving cryptocurrencies.

The letters suggest that U.S. banks were deliberately steered away from engaging with crypto businesses during 2022.

Coinbase Chief Legal Officer Paul Grewal announced the development on X, stating that the newly released files confirm coordinated efforts by the FDIC to restrict cryptocurrency-related activities.

According to Grewal, these efforts ranged from halting basic Bitcoin transactions to impeding more complex crypto services.

He further criticized the FDIC, saying, “Note that FDIC magically found TWO more pause letters in this search after saying before that it had complied with an earlier Court order. It’s hard to believe in their good faith when their sweater further unravels every time we pull on the thread.”

The unredacted documents follow a December release that heavily redacted details. Subsequently, a court ruling mandated that the FDIC provide clearer records.

The “pause letters” are seen as part of what many in the crypto industry call “Operation Chokepoint 2.0.”

This term parallels the original “Operation Choke Point,” a 2013 U.S. Department of Justice initiative targeting banks and payment processors working with high-risk or controversial industries.

These industries included payday lenders and firearm sellers.

The released documents reveal that banks were instructed to pause all crypto asset-related activities.

This directive caused delays in launching crypto services and heightened uncertainty over compliance requirements.

Crypto Advocates Pin Hopes on Trump for Regulatory Relief in 2025

Recent developments have intensified calls for a full investigation into “Operation Chokepoint 2.0.” Coinbase’s legal chief, Paul Grewal, and industry leaders have urged Congress to act.

Grewal emphasized the urgency, stating, “The new Congress should launch hearings on all this without delay.”

Lawmakers, including Representative French Hill and crypto advocate David Sacks, have voiced support for examining regulatory practices.

The crypto industry now hopes for a more crypto-friendly approach from Donald Trump’s incoming administration.

On December 13, 2024, a federal judge criticized the FDIC over excessive redactions in crypto “pause letters” sent to banks following a Coinbase-backed FOIA lawsuit.

Judge Ana Reyes expressed concern over the FDIC’s “lack of good-faith effort” and ordered the agency to provide clearer redactions by January 3.

The redacted letters revealed that the FDIC had directed 23 banks to halt or limit crypto-related activities.

In the tweet, Grewal argued that these actions support allegations that the Biden administration targeted the crypto industry.

He called the FDIC’s extensive redactions evidence of deeper issues, asking, “What is [the FDIC] working so hard to hide?”

Trump’s transition team is reportedly exploring reforms to banking agencies, including the FDIC, which could signal regulatory shifts ahead.

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