A long-running legal fight over crypto banking transparency reached a turning point this week after U.S. regulators agreed to release disputed records and close a lawsuit brought by the largest crypto trading exchange in the country, Coinbase (Nasdaq: COIN).
The case has drawn close attention in Washington and Wall Street, touching on how far regulators went behind the scenes as banks pulled back from serving digital asset firms.
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Coinbase lawsuit asks for transparency
The lawsuit traces back to Freedom of Information Act (FOIA) requests filed in late 2023 and 2024 by History Associates, acting at the direction of Coinbase.
Coinbase sought records from the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) after reports emerged that regulators had sent informal so-called pause letters to banks, urging them to delay or limit crypto-related activities.
The exchange argued that those communications amounted to de facto policy without public rulemaking. Coinbase Chief Legal Officer Paul Grewal said at the time that regulators were applying pressure while withholding clarity.
“Financial regulators have used multiple tools at their disposal to try to cripple the digital asset industry,” Grewal wrote , adding that agencies “refuse to provide any rules, let alone consistent or coherent ones.”
The FDIC initially denied the FOIA requests, arguing that bank supervisory documents were broadly exempt from disclosure. That stance later drew criticism from a federal judge.
Operation Choke Point 2.0 concerns shape crypto banking debate
The dispute became closely tied to allegations known as Operation Choke Point 2.0 , a term used by industry participants and lawmakers to describe informal efforts to restrict crypto firms’ access to the banking system.
A House Financial Services Committee investigation found that regulators relied on informal guidance, vague risk language, and supervisory pressure that led at least 30 crypto-related entities to lose banking services.
Committee Chair French Hill said the findings showed how regulators “worked to debank the digital asset ecosystem.”
Documents later released by the FDIC showed repeated requests for banks to pause or refrain from expanding crypto activities, even when proposals complied with existing rules.
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Settlement brings Coinbase lawsuit to a close
In a joint status report filed Feb. 6, the FDIC agreed to pay $188,440 in legal fees, revise its FOIA disclosure practices, and formally end the case.
The court previously ruled that the FDIC violated FOIA by categorically withholding the pause letters instead of reviewing them individually.
Acting FDIC Chair Travis Hill said the agency’s document release reflected “a commitment to enhance transparency, beyond what is required by the Freedom of Information Act.”
Following the settlement, Grewal said the effort had been justified. “The years of litigation were worth it,” he wrote , adding that the records confirmed banks were told to steer clear of crypto.
The case is expected to formally close once the FDIC remits payment.
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This story was originally published by TheStreet on Feb 9, 2026, where it first appeared in the Policy section. Add TheStreet as a Preferred Source by clicking here.
