Coinbase, the American cryptocurrency exchange, has obtained additional unredacted documents from the Federal Deposit Insurance Corporation (FDIC) after months of legal proceedings. This release is part of Coinbase’s ongoing investigation into allegations surrounding “Operation Chokepoint 2.0” and follows a legal battle over its Freedom of Information Act (FOIA) requests.
The newly disclosed documents, referred to as “pause letters,” reveal that the FDIC advised banks to halt activities involving cryptocurrencies. These letters suggest that U.S. banks were intentionally discouraged from engaging with crypto businesses during 2022. Paul Grewal, Coinbase’s Chief Legal Officer, announced the development, 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.
Grewal further criticized the FDIC, expressing skepticism over their good faith, as they magically found two more pause letters after previously stating that they had complied with an earlier court order. The unredacted documents follow a previous release in December that heavily redacted details. A court ruling subsequently mandated clearer records from the FDIC.
The pause letters are seen as part of what many in the crypto industry call “Operation Chokepoint 2.0,” which parallels the original Operation Choke Point initiated by the U.S. Department of Justice in 2013. The released documents reveal that banks were instructed to pause all crypto asset-related activities, causing delays in launching crypto services and increasing uncertainty over compliance requirements.
These recent developments have led to increased calls for a full investigation into Operation Chokepoint 2.0. Coinbase’s legal chief, Paul Grewal, and industry leaders have urged Congress to take action. Grewal emphasized the urgency, stating that the new Congress should hold hearings on the matter without delay. Lawmakers, including Representative French Hill and crypto advocate David Sacks, have voiced support for examining regulatory practices. The crypto industry is now hopeful for a more crypto-friendly approach from Donald Trump’s incoming administration.
On December 13, 2024, a federal judge criticized the FDIC for excessive redactions in the 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. Grewal argued in a tweet that these actions support allegations that the Biden administration targeted the crypto industry, pointing to the FDIC’s extensive redactions as evidence of deeper issues and questioning what they are trying to hide.
Trump’s transition team is reportedly exploring reforms to banking agencies, including the FDIC, which could indicate potential regulatory shifts in the future.
