U.S. Judge Criticizes FDIC for Concealing Crypto ‘Pause Letters’ in Coinbase-Related FOIA Case

A federal judge in the U.S. has criticized the Federal Deposit Insurance Corporation (FDIC) for its extensive redactions of the so-called “pause letters” sent to banks concerning crypto-related activities.

This criticism emerged during a Freedom of Information Act (FOIA) lawsuit supported by Coinbase, as revealed by Paul Grewal, the exchange’s Chief Legal Officer, in a recent post on X.

Judge Indicates FDIC Lacks Good-Faith Effort

In a text order dated December 12, Judge Ana Reyes of the Washington, DC, District Court voiced her concerns, indicating that the FDIC seemed to lack a “good-faith effort” in its redaction practices.

“Defendant cannot simply blanket redact everything that is not an article or preposition,” Judge Reyes stated, urging for “more thoughtful redactions” and directing the FDIC to resubmit the letters by January 3.

The judge also cautioned that the FDIC must be prepared to justify each redaction.

The “pause letters” have generated controversy within the crypto sector.

These letters, some of which have entire pages obscured, were sent to 23 financial institutions, advising them to cease or refrain from expanding their crypto-related services and products.

“What is [the FDIC] working so hard to hide?” Grewal questioned, asserting that the letters reinforced the long-held belief in the crypto industry that the Biden administration was attempting to restrict crypto’s access to financial services — a strategy known as “Operation Chokepoint 2.0.”

He had previously criticized the FDIC for employing “excessively broad redactions” in the letters.

We appreciate the Court’s careful consideration. What is @FDICgov working so hard to hide? 3/3

— paulgrewal.eth (@iampaulgrewal) December 12, 2024

The controversy surrounding the FDIC’s management of the letters occurs against a wider backdrop of potential regulatory changes.

The Wall Street Journal reported that Donald Trump’s presidential transition team had deliberated on merging or abolishing regulatory agencies such as the FDIC.

His advisors are also contemplating modifications to the Office of the Comptroller of the Currency and the Federal Reserve.

Coinbase to Pursue Additional Revenue Streams Under Trump

Last month, Tom Duff Gordon, Coinbase’s Vice President of International Policy, indicated that the exchange intends to pivot towards more stable revenue streams, including stablecoin fees, staking rewards, and subscription services under Trump.

“We want to establish an earnings profile that isn’t solely reliant on market volatility,” he clarified.

As Trump prepares to assume office, the anticipation of diminished regulatory barriers brings optimism for U.S.-based exchanges like Coinbase.

Gordon reaffirmed the company’s dedication to the American market, stating, “The U.S. will continue to be our most important market.”

The cryptocurrency industry has emerged as a significant player in political financing during the 2024 election cycle, with industry-funded PACs raising a total of $190 million.

The Winklevoss twins, Cameron and Tyler, are notable as the largest individual contributors, having donated a combined $10.1 million.

Other prominent contributors from the cryptocurrency sector include Coinbase CEO Brian Armstrong, who has contributed over $1.3 million to both Republican and Democratic PACs.

As reported, Coinbase has also pledged a $25 million donation to the super political action committee Fairshake, aiming to enhance support for pro-crypto candidates in the upcoming 2026 midterm elections.

The post U.S. Judge Slams FDIC for Redacting Crypto ‘Pause Letters’ in Coinbase-Backed FOIA Lawsuit appeared first on Cryptonews.