FDIC resists transparency on Operation Chokepoint 2.0 — Coinbase CLO
Some U.S. government agencies have been criticized for their lack of transparency regarding their involvement in Operation Chokepoint 2.0. This initiative surfaced during the Biden administration and allegedly involved the denial of banking services to cryptocurrency and tech founders. Paul Grewal, the chief legal officer of Coinbase, has been vocal about these concerns, pointing out that such actions have not been addressed adequately, particularly by the Federal Deposit Insurance Corporation (FDIC).
The initial allegations of Operation Chokepoint 2.0 were fueled by the collapse of several banks with a reputation for supporting crypto. Critics, including venture capitalist Nic Carter, have labeled the government’s actions as a systematic push to pressure banks into severing ties with blockchain and cryptocurrency enterprises.
Despite ongoing regulatory changes, Grewal expressed frustration in a post on X (formerly Twitter) on March 8, asserting that agencies like the FDIC are “resisting basic transparency” and emphasizing that they appear to be unresponsive to public demands for clearer communication and accountability.
In response to the alleged obfuscation, Coinbase has taken legal steps to compel the FDIC to clarify the processes it undertook to ensure that no critical documentation related to the operation was destroyed. Grewal noted that the agency has consistently declined to provide this information. His remarks coincided with the U.S. Office of the Comptroller of the Currency’s (OCC) recent softening of its position regarding how banks can interact with firms engaged in cryptocurrency, coinciding with remarks from former President Trump where he declared an intention to dismantle Operation Chokepoint 2.0.
Trump made his promise during the White House Crypto Summit, asserting that he was committed to restoring access to banking services for crypto companies. Yet, the fallout from this governmental maneuver has been significant, with reports indicating that at least 30 tech and cryptocurrency founders had been “secretly debanked” during this period.
Grewal’s efforts to obtain information through the Freedom of Information Act (FOIA) have also raised questions about the FDIC’s transparency. According to him, the agency has only provided limited snippets from certain documents that do not adequately address the systemic issues raised in the complaint submitted by History Associates. Moreover, many documents have been heavily redacted, obscuring essential information and raising concerns about what the FDIC is concealing.
In a parallel effort, Coinbase also filed a FOIA request with the Securities and Exchange Commission (SEC) to ascertain the number of investigations and enforcement actions against cryptocurrency firms occurring between April 17, 2021, and January 20, 2025.
Earlier this year, Trump signed an executive order aimed at alleviating some banking challenges faced by Web3 companies, ushering in clearer regulations for digital assets. Notably, this order excludes both the Federal Reserve and the FDIC from any working groups focused on cryptocurrency, a move interpreted by some, including Custodia Bank’s Caitlin Long, as a potential end to prior efforts to debank crypto firms.
The ongoing dialogue and actions surrounding these issues indicate significant tensions between emerging technologies in finance and traditional regulatory frameworks, highlighting a critical juncture in the development of the cryptocurrency ecosystem in the U.S.
