What Is The FDIC Hiding? Coinbase Demands Crypto Disclosure

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According to court papers filed on Tuesday, Coinbase has pushed back hard against the Federal Deposit Insurance Corporation’s latest bid to toss out its Freedom of Information Act lawsuit.

The exchange wants more details about so-called “pause letters” that the FDIC allegedly sent to banks, telling them to step away from crypto services. Now, Coinbase is asking a judge to force the FDIC to explain under oath how it handled those records and to hand over all FOIA denial letters issued between 2020 and 2024.

Reports Shed Light On Pause Letters

Based on reports, the FDIC first applied a broad exemption to hide the letters as “confidential bank examination records.” It paid no mind to sorting facts from analysis.

Coinbase notes that it took four court orders and six separate document productions for the regulator to cough up the key files. That drawn-out process, the exchange argues, shows that the agency still “stonewalls our efforts to shed light” on past moves that targeted crypto.

Coinbase’s Chief Legal Officer, Paul Grewal, wrote on X that the FDIC staff “continue to stonewall our efforts” and that these tactics “can’t and won’t stand.”

We also filed a motion to take additional discovery from the FDIC to get to the bottom of their FOIA practices, which as we’ve seen in our case are far from what the law requires. The agency should testify via a 30(b)(6) deposition and produce the letters it sends to FOIA…

— paulgrewal.eth (@iampaulgrewal) July 31, 2025

FDIC Procedures Under Review

Reports have disclosed that internal FDIC policy tells examiners to withhold any document touching on Exemption 8 in full, with “no duty to segregate factual from analytical or deliberative material.”

In a January hearing, regulators admitted they had no formal litigation-hold process for FOIA requests. The initial search also focused only on documents shared with the agency’s Office of Inspector General.

That narrow scope meant important emails and memos—ones that mention “pause letters” directly—were missed at first.

Banking Access Takes Hit

According to an AIMA survey, 75% of crypto funds struggle to get basic banking services. That squeeze on banking partners has snarled transactions and settlement options for firms like Coinbase.

Banks are now wary of any hint of regulatory risk. If the court orders more sworn testimony, it could shine a light on who really signed off on the “pause letters,” and why examiners thought they had to hide so much.

In its motion for further discovery, Coinbase also wants every FOIA denial letter the FDIC sent over a four-year stretch. It’s asking for sworn statements from FDIC officials about how they decided which records to keep secret.

Featured image from Credit Sesame, chart from TradingView

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