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- Coinbase accuses the FDIC of delaying a lawsuit over public records linked to alleged efforts to cut crypto firms off from banking services.
- The case centers around “Operation Chokepoint 2.0,” a claim of coordinated government pressure on banks to sever ties with crypto businesses.
- Coinbase seeks internal FDIC communications to prove regulators pressured banks despite no new laws or risks.
On Thursday, the crypto exchange opposed a request by the Federal Deposit Insurance Corporation (FDIC) to extend its deadline in an ongoing public records lawsuit. The dispute revolves around key documents linked to the alleged debanking of crypto firms, a controversy that Coinbase claims is part of a hidden government campaign to marginalize digital assets from the U.S. financial system.
At the heart of the case is what Coinbase and others have labeled “Operation Chokepoint 2.0,” a supposed coordinated effort by federal banking regulators to pressure financial institutions into cutting ties with crypto-related companies, all without public rulemaking or Congressional oversight.
Coinbase’s Chief Legal Officer, Paul Grewal, didn’t mince words, calling the FDIC’s attempt to push its deadline from April 16 to May 2 “absurd” in a post on X (formerly Twitter). Grewal argued that the FDIC has had months to prepare and previously committed to filing within 30 days of a court stay being lifted.
Instead, the agency filed a 13-page motion seeking 16 extra days to prepare a four-page pre-motion notice, a move that Coinbase says lacks legal merit and reeks of delay tactics. “The agency’s interpretation of the default deadline is legally incorrect,” Coinbase wrote in the filing, accusing the FDIC of trying to “evade its legal obligations.”
Coinbase Lawsuit Exposes Hidden Crypto Policy
The lawsuit is part of a broader clash between the crypto industry and federal regulators, particularly during the Biden administration. Coinbase is seeking internal communications that it believes will reveal how agencies like the FDIC discouraged banks from servicing crypto businesses despite no explicit financial risks or new laws banning such relationships.
In February, nearly 800 pages of internal documents were released by the FDIC after pressure from Coinbase and court orders. These documents showed that banks were warned about the “reputational risks” of working with crypto clients and, in some cases, advised to stop such activities until deemed “safe and sound” by regulators.
Critics say this amounts to backdoor regulation policy enforcement without legislation.
Grewal has previously described these efforts as a “coordinated campaign to shut down lawful crypto activity.” Coinbase CEO Brian Armstrong went even further, calling it “one of the most unethical and un-American things that happened in the Biden administration.”
Coinbase Fights Back in Federal Crypto Investigation
The legal battle is unfolding under the watchful eye of Capitol Hill. The House Oversight Committee is actively investigating whether federal regulators engaged in improper debanking practices. Lawmakers have already reached out to Coinbase, Andreessen Horowitz, and other industry leaders for documents and testimony.
As the crypto industry faces growing pressure from Washington, this case may mark a turning point in how much regulatory opacity the courts and the public are willing to tolerate.
For now, Coinbase is fighting back with urgency, determined not to let a key federal agency run out the clock on a controversy that could reshape the future of crypto regulation in America.
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