History Associates has partnered with Coinbase in a lawsuit against the United States Federal Deposit Insurance Corporation (FDIC) to compel compliance with a Freedom of Information Act (FOIA) request. The lawsuit, filed on June 27, seeks the release of documents known as “pause letters,” which were allegedly issued by the FDIC’s inspector general to financial institutions, instructing them to halt cryptocurrency-related activities.
Background of the Lawsuit
The lawsuit stems from the FDIC’s refusal to disclose these “pause letters” after Coinbase hired History Associates Incorporated to submit a FOIA request. The FDIC denied this request, prompting History Associates to take legal action to obtain the records.
Content of the Suit
The complaint alleges that the FDIC and other regulatory agencies used these letters as a tactic to pressure financial institutions into cutting ties with digital asset businesses, reminiscent of the controversial “Operation Choke Point.” This past initiative involved financial regulators coercing banks to terminate relationships with certain industries, such as payday lenders.
Under the FOIA, federal agencies are required to release requested information unless it falls under specific exemptions. Even if parts of the records are exempt, agencies must provide non-exempt portions. Despite this mandate, the FDIC refused to release the “pause letters,” citing exemptions related to trade secrets and examination materials, without offering detailed justification.
Also Read: Coinbase and Stripe Partner to Streamline Crypto Onboarding
Goals of the Lawsuit
The primary objective of the lawsuit is to force the FDIC to release the “pause letters” and other related documents to reveal the extent and nature of the FDIC’s actions against the digital asset industry. History Associates aims to hold the FDIC and other regulatory bodies accountable for their actions and ensure transparency in their regulatory practices.
Ongoing Regulatory Disputes
In addition to the lawsuit against the FDIC, Coinbase is embroiled in a separate legal battle with the U.S. Securities and Exchange Commission (SEC). The SEC has accused Coinbase of operating an illegal exchange that trades unregistered securities. Despite these challenges, litigation analyst Elliott Stein suggests that Coinbase has a minimal likelihood of failure in its dispute with the SEC.
