US District Judge Sharpens Criticism of FDIC's Handling of Coinbase Lawsuit, Warns of 'Severe Consequences' for Noncompliance

District Judge Ana C. Reyes of the United States District Court sharply criticized the Federal Deposit Insurance Corporation (FDIC) for its handling of a lawsuit

A United States District Court judge has sharply criticized the Federal Deposit Insurance Corporation (FDIC) over its handling of a lawsuit filed by cryptocurrency exchange Coinbase, The Block reported.

The lawsuit pertains to the FDIC's issuance of "pause letters" to banks, advising them to stop engaging with crypto-related activities, an action that has been dubbed "Operation Choke Point 2.0." This measure, along with the broader debanking issue, has drawn significant attention from the crypto industry and U.S. lawmakers. Two congressional hearings on the matter are scheduled for this week, following a probe by the House Committee on Oversight Committee.

District Judge Ana C. Reyes, who was appointed by then-President Joe Biden in February 2023, expressed frustration with the FDIC's narrow interpretation of a Freedom of Information Act (FOIA) request and the possible destruction of related documents.

During the hearing, Reyes questioned FDIC attorney Andrew Dober, who was unable to provide satisfactory answers regarding the agency's interpretation of Coinbase (NASDAQ:COIN)'s FOIA request. The judge dismissed Dober's attempt to delay the proceedings due to a change in FDIC leadership and indicated that depositions would proceed swiftly, warning of severe consequences for noncompliance.

The FDIC's recent actions, including the release of hundreds of documents in response to the court's critique, have been closely scrutinized. Some documents provided to Coinbase were fully redacted, and there are allegations from a whistleblower that sensitive documents were destroyed during the transition between presidential administrations.

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