Coinbase Files New Motion Against FDIC Over FOIA Non-Compliance

Coinbase, a leading cryptocurrency exchange, has intensified its legal dispute with the Federal Deposit Insurance Corporation (FDIC) by filing a new motion in the D.C. District Court. The exchange asserts that the FDIC is not fully complying with its Freedom of Information Act (FOIA) requests, which are aimed at obtaining critical documents related to the regulatory body's supervision of cryptocurrency activities. Coinbase claims that the FDIC's lack of cooperation is obstructing its efforts to access essential information, thereby hindering its ability to operate transparently and comply with regulatory requirements.

The latest motion filed by Coinbase's legal team underscores the ongoing conflict, stating that the FDIC's unwillingness to provide the necessary information is impeding the exchange's ability to access vital documents. This situation has prompted Coinbase to revive its FOIA lawsuit, accusing the FDIC of withholding information that is crucial for the exchange to understand and adhere to regulatory guidelines. Coinbase argues that the FDIC's actions are not only frustrating its efforts to operate within the legal framework but also raising concerns about transparency and accountability in the regulatory process.

Coinbase's legal representatives have requested information regarding the FDIC's response to its FOIA requests, specifically concerning the regulator’s policy or practice of “failing to conduct complete searches of all relevant databases and failing to take adequate steps to preserve responsive documents.” The exchange's legal team has emphasized that the only viable path forward is for the court to intervene and compel the FDIC to comply with the FOIA requests. Coinbase believes that access to these documents is crucial for ensuring that the exchange can continue to provide secure and compliant services to its users. The exchange's persistence in pursuing this legal action underscores its commitment to transparency and regulatory compliance, despite the challenges posed by the FDIC's reluctance to cooperate.

Paul Grewal, Coinbase’s chief legal officer, claims that the pause letters, which are part of “Operation Choke Point 2.0,” are an alleged attempt by Biden Administration government regulators to stifle the crypto industry. The exchange hired the law firm History Associates, which filed a motion in January asking a federal court to intervene. The following month, the court paused the FDIC’s deadline to respond to History Associates’ amended FOIA complaint “so that the parties could engage in a biweekly, informal information-sharing process.”

Last month, the FDIC released redacted documents related to its supervision of crypto-related activities, which include pause letters sent to 24 banks as well as communications and records involving other regulated institutions. House Oversight Committee Chairman James Comer subsequently sent a letter to FDIC Acting Chairman Travis Hill requesting unredacted copies of the documents. The ongoing dispute between Coinbase and the FDIC raises broader questions about the regulatory environment for cryptocurrency exchanges in the United States. The exchange's efforts to obtain information through FOIA requests highlight the importance of transparency and accountability in regulatory oversight. As the cryptocurrency industry continues to evolve, it is essential for exchanges to have access to the information they need to operate within the legal framework and provide secure services to their users. The outcome of this legal battle could have significant implications for the regulatory landscape and the future of cryptocurrency exchanges in the United States.