History Associates has teamed up with Coinbase in a lawsuit against the Federal Deposit Insurance Corporation (FDIC). They want the FDIC to release certain documents.
These documents, called “pause letters,” are alleged to instruct financial institutions to stop crypto-related activities.
According to a legal document filed on June 27, the suit responds to the FDIC’s refusal to provide these letters. The agency’s inspector general reportedly sent these letters to financial institutions, instructing them to halt cryptocurrency activities.
Coinbase hired History Associates Incorporated to submit a FOIA request to the FDIC. This request was denied, leading History Associates to take legal action to obtain the documents.
Coinbase’s FOIA request and the FDIC’s denial
For several years, many federal financial regulators, including the SEC, FDIC, and Federal Reserve Board, have targeted the crypto industry. This lawsuit seeks to reveal the FDIC’s involvement in this alleged campaign.
In October 2023, a report by the FDIC’s Office of Inspector General (OIG) disclosed that the FDIC had sent pause letters to numerous financial institutions.
These letters instructed the institutions to cease all crypto-related activities indefinitely. The OIG criticized the pause letters, stating they contradicted previous FDIC guidance and could stifle financial innovation in the crypto industry.
The lawsuit alleges that the pause letters were not an oversight. Instead, they were part of a deliberate effort by the FDIC and other regulators to pressure banks into cutting off services to crypto firms.
This strategy mirrors a previous campaign known as Operation Choke Point, where regulators pressured banks to sever ties with payday lenders. That campaign was halted after a congressional investigation and a successful lawsuit.
Operation Choke Point 2.0
The FDIC is now accused of implementing Operation Choke Point 2.0, targeting the digital-asset industry. According to the lawsuit, it’s illegal for financial regulators to secretly coerce institutions into cutting ties with businesses outside their jurisdiction.
The Supreme Court recently confirmed that such pressure campaigns violate basic constitutional rights. Coinbase turned to FOIA to shed light on the FDIC’s actions.
The lawsuit claims the FDIC refused to disclose the pause letters, despite the OIG report revealing their existence and quoting from them. History Associates argues that the FDIC’s refusal violates its FOIA obligations.
The lawsuit also highlights that Coinbase is the largest publicly traded crypto trading platform in the U.S. and a key player in the crypto economy.
The company is registered as a money-services business with the Financial Crimes Enforcement Network (FinCEN) and licensed by various state regulators.
Jai Hamid
