The Federal Deposit Insurance Corporation (FDIC) has recently been put into the crosshairs. This is because of how it scrubbed up documents for its ongoing legal fight with Coinbase.
The court said the FDIC acted in bad faith by excessively redacting documents. These documents were obtained through the Freedom of Information Act (FOIA).
The ruling also requires the agency to review and revise its redactions to provide greater transparency and fairness to the redaction process.
Court Sets Deadline for Coinbase-FDIC Document Release
Following this ruling, a legal battle intensified for Coinbase and the FDIC. This is because the court did not favor the agency’s blanket redaction method.
The judge also found that the agency had not done the necessary work to justify its extensive redactions. Specifically calling the lack of nuanced rationale provided by the FDIC.
The ruling said the FDIC must scrutinize the documents for changes. They must make sure that any redactions are justified and can be fully explained and defended.
The court sets a deadline of January 3, 2025, for the documents to be delivered to Coinbase. This decision comes at a moment in the ongoing litigation that has already shown several questionable moves on the part of the agency.
Coinbase’s legal team, headed by Chief Legal Officer Paul Grewal, continues to voice worries over the FDIC’s leaks of private client data. This is in response to ongoing concerns about secrecy surrounding the FDIC and the abrupt closing of accounts.
Coinbase Claims Evidence of Government Crypto Suppression
This ruling follows Coinbase’s release of documents illustrating FDIC involvement in the shady Operation Chokepoint 2.0.
According to these documents, obtained through a FOIA request, the agency told banks not to service crypto businesses.
In 2022, one key document was provided that outlined the FDIC’s attempt to pressure financial institutions to stop performing crypto-related transactions.
Coinbase’s legal team sees these documents as proof of a coordinated effort by federal agencies to slow the growth of the cryptocurrency industry.
The FDIC, however, actively discouraged financial institutions from offering services to crypto firms. Some such letters were sent directly to banks. ‘We argue this is part of a broader government push to suppress crypto innovation.’
A more sweeping consequence of the court’s decision to send the FDIC back to the drawing board on its redactions is that it could affect how federal agencies handle requests for information under FOIA.
If the agency refuses to comply with this new ruling, further range of action on their behalf could include further action. It also means the whole regulatory process could be out in the open.
Coinbase’s victory, however, also raises bigger concerns about where the federal government stands and what regulations around crypto it would impose.
