The Federal Deposit Insurance Corporation has agreed to pay $188,440 in legal fees and overhaul its Freedom of Information Act practices to settle a lawsuit over its withholding of so-called crypto “pause letters.” The settlement concludes a multi-year legal battle initiated by Coinbase that exposed dozens of letters the FDIC sent to banks ordering them to halt crypto-related activities, which critics allege were part of a coordinated debanking campaign referred to as “Operation Choke Point 2.0.”
The FDIC has settled a lawsuit and will pay $188,440 in attorney’s fees after a court found it violated federal disclosure law by withholding “pause letters” sent to banks. The settlement was detailed in a joint status report filed in federal court and concludes litigation that forced the regulator to release records showing how banks were pressed to limit crypto activity.
The records showed the FDIC sent letters to banks “asking them to pause, or not expand, planned or ongoing crypto-related activities.” A court ruled in November that the agency violated FOIA by initially categorically withholding the letters and making improper redactions. It took four court orders for the FDIC to finally produce all responsive documents.
Coinbase Chief Legal Officer Paul Grewal stated on social media that the litigation successfully uncovered dozens of crypto ‘pause letters,’ calling them “indisputable proof of OCP2.0 and the coordinated effort to sideline the industry.” The settlement requires the FDIC to change certain FOIA practices, including pledging it does not maintain a blanket policy to withhold all bank supervisory documents.
Joe Ciccolo, founder of BitAML, told reporters the ruling shows crypto oversight was shaped by “political and reputational considerations.” He added, “Shame on the FDIC—they are supposed to exemplify transparency given their mandate to protect consumers and insure the public’s money.” The term “Operation Choke Point 2.0” refers to alleged coordinated efforts by U.S. bank regulators to restrict crypto firms’ banking access.
