Coinbase CLO Slams FDIC for ‘Absurd’ Delays in Crypto Debanking Records Lawsuit

In a court filing on Thursday, Coinbase opposed a 16-day extension request by the Federal Deposit Insurance Corporation (FDIC) to delay its response in a public records lawsuit over documents tied to the alleged debanking of crypto firms. 

The case centers on internal communications that Coinbase believes show the agency engaged in a covert campaign, dubbed “Operation Chokepoint 2.0,” to isolate crypto from the U.S. financial system.

Coinbase Chief Legal Officer Paul Grewal pushed back on treating the FDIC’s request as standard procedure, calling the agency’s request “absurd” in an X post on Thursday.

The FDIC did not immediately respond to Decrypt’s request for comment. Decrypt has reviewed the filing posted by Grewal below, but has yet to independently verify.

Coinbase argues the FDIC’s response deadline is April 16, not May 2 as the agency claims in its own motion.

The crypto exchange said the agency is attempting to “evade its legal obligations” and called the extension “unwarranted.”

Coinbase also said the FDIC has had months to prepare and had already said it needed only 30 days post-stay to file a motion to dismiss. 

That motion, Coinbase noted, requires just a four-page pre-motion notice, far shorter than the 13-page extension request itself.

“The agency’s interpretation of the default deadline is legally incorrect,” Coinbase wrote, adding the agency shows no “sound reason” for the requested extension.

The court battle is part of the growing scrutiny the FDIC is facing over whether it helped coordinate an informal campaign to debank crypto firms without public rulemaking or congressional oversight.

Documents and more documents

In February, the agency released nearly 800 pages of internal documents, following pressure from Coinbase and court orders, revealing how banks were discouraged from offering services to companies engaged in digital assets. 

Some were told to halt activity until regulators deemed it “safe and sound,” while others received warnings about “reputation risk” tied to crypto, even in the absence of financial system concerns.

The disclosures fueled long-standing allegations that federal regulators, under the Biden administration, attempted to suppress the crypto industry by leaning on financial institutions behind closed doors. 

Grewal characterized the move as a “coordinated effort to stop a wide variety of crypto activity.” At the same time, CEO Brian Armstrong has called the campaign “one of the most unethical and un-American things that happened in the Biden administration.”

The House Oversight Committee is now investigating whether such tactics amounted to improper debanking of lawful businesses. 

Lawmakers have reached out to Coinbase, Andreessen Horowitz, and other industry leaders, seeking documentation and testimony.

Edited by Sebastian Sinclair