Coinbase’s Paul Grewal criticizes FDIC for delay tactics in FOIA lawsuit

Coinbase chief legal officer Paul Grewal has criticized the Federal Deposit Insurance Corporation (FDIC) for delay tactics. This is in response to the FDIC asking the court for 16 more days on the Coinbase Freedom of Information Application (FOIA) lawsuit.

The exchange filed that FOIA a few months ago to obtain information on the federal institution’s role in debanking crypto firms. It is asking the FDIC to provide internal communications that prove its involvement in Operation Choke Point 2.0.

Coinbase and the FDIC remain in court

Although the FDIC has already made some internal documents public based on court orders, Coinbase claimed in March that the agency has stopped sharing the required information. The FDIC later filed a 13-page motion to ask the court for an extension of time to respond.

Grewal considers this request an attempt to stonewall efforts.

He said:

“Parties in litigation regularly ask for reasonable extensions to deadlines–fine.  But @FDICgov just filed 13 pages in our FOIA suit asking the Court for another 16 days to decide whether to ask us for … even more delay.”

Meanwhile, the executive also shared the exchange’s response to the request. According to Coinbase, the request is absurd and unnecessary. It argued that FDIC wrongly calculated the deadline to respond as May 2 instead of April 16.

It added that the court should not grant the request for an extension as the FDIC has already said it wants to ask the court to dismiss the case. Thus, the agency had enough time to prepare and could file a much shorter motion of four pages to request a dismissal of the lawsuit. Coinbase is asking the court to reject the request and compel the FDIC to respond by April 16.

US agencies are changing their approach to dealing with crypto

Meanwhile, the FDIC and Coinbase lawsuit is only one of the few ongoing crypto-focused legal actions. Internal documents released by FDIC have already shown that the regulator contributed to debanking crypto businesses as it discouraged banks from offering services.

In most cases, the regulator either mentioned that offering services to crypto companies posed reputational risks or asked banks to stop offering services until regulators confirmed they were safe. Coinbase believes making such information public will show the extent of anti-crypto damage under ex-President Joe Biden’s administration.

While the lawsuit seeks to uncover how the former administration actively opposed the crypto industry, the new administration has already taken steps to change things. For instance, the FDIC and the Office of Comptroller of Currency (OCC) have all issued guidance on enabling banking access for the industry, while the Securities and Exchange Commission is now regulating through dialogue.

Interestingly, the US Department of Justice (DOJ) has adopted the mandate, with the Deputy Attorney General issuing a memorandum that all “regulation through prosecution” should be terminated. The memo, which specifically mentioned digital assets, noted that the DOJ is not a digital assets regulator and will stop pursuing all litigation that seeks to impose a regulatory framework on digital assets.

Instead, it will allow the appropriate agencies to impose a regulatory framework on the industry while focusing on prosecuting those who victimize crypto investors or use digital assets for illicit activities.

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