District Judge Ana C. Reyes has joined a growing list of federal judges excoriating financial regulators for their treatment of the cryptocurrency industry during the former Biden Administration, according to a transcript of a hearing in Coinbase’s lawsuit against the Federal Deposit Insurance Corporation released on Thursday.
Reyes was appointed to the court by then-President Joe Biden in February 2023.
Reyes began the hearing with a blistering critique of the FDIC’s behavior in the ongoing lawsuit filed last year, noting the agency has failed to produce a significant number of documents related to a previously filed FOIA request by Coinbase and may have destroyed information pertaining to the case.
"Can you please explain to me why you took the position you did with respect to the interpretation of the FOIA request, which was pretty obvious on its face not limited as you limited?” Reyes opened the hearing by asking, beginning a curt exchange between the court and FDIC attorney Andrew Dober.
DOBER: Yes, Your Honor, may I --
THE COURT: No, you can answer my questions.
[...]
DOBER: I do have a statement on those issues, Your Honor. The FDIC respectfully requests that the Court stay the case for three weeks --
THE COURT: No. No. I want you to answer my question.
DOBER: -- due to a change in leadership --
THE COURT: I want you to answer my questions right now.
DOBER: Yes, Your Honor. Could Your Honor repeat those questions.
THE COURT: Who took the incredibly narrow illogical view of their FOIA request.
DOBER: Your Honor, I would say that was the way that it was interpreted --
THE COURT: I didn't ask the way it was interpreted. It was interpreted way too narrowly, in a way that's barely laugh -- it's almost laughable. Now, who did that?
“It is truly extraordinary to see a federal judge excoriate a federal agency's counsel in the manner he does so here,” Scott Johnsson, a general partner at VBCapital, told The Block in a direct message.
Last year, archivist firm History Associates sued the FDIC on behalf of Coinbase to obtain documents related to one of the nation’s top bank regulators' decisions to send “pause letters” to banks for crypto-related activities.
Coinbase was seeking information related to what some have dubbed "Operation Choke Point 2.0," or the concerted effort by multiple federal agencies, including the FDIC, Office of the Comptroller of the Currency and Federal Reserve, to shut out crypto companies from U.S. banking services.
Industry participants have long accused banks of limiting their access to banking services, though the debanking issue intensified after the collapse of the crypto exchange FTX. This was at a time when a collection of government officials formed an “Anti-Crypto Army” to go after crypto participants.
However, the scope of Operation Choke Point 2.0 is now being investigated on multiple fronts in Congress and the courts following the election of President Donald Trump, who formed connections with the crypto industry while campaigning for re-election and formed business interests in the industry.
Notably, U.S. lawmakers have scheduled two hearings to tackle the debanking issue this week. This comes on the heels of a probe launched in the first week of Trump’s office by the House Committee on Oversight Committee, which has typically taken a hands-off approach to crypto.
In a sign of how seriously Reyes sees the FDIC's actions, she denied Dober’s attempt to delay the case due to a recent change in leadership at the organization and is expediting the case. Notably, Reyes intended to schedule a deposition of an FDIC employee in mid-February and said if he was not prepared or responsive, "life will become very, very unpleasant for the FDIC."
“Depositions take a lot of time to prepare, so the judge suggesting the witness would be deposed in a week was essentially impossible (and CB wouldn't want to do it that quickly anyway) but illustrative of how frustrated she felt,” said Johnsson.
In addition to blatantly stating the FDIC took an extraordinarily narrow view regarding the documents it needed to produce to Coinbase’s FOIA request, Reyes questioned the agency’s attorneys on whether they placed a litigation hold to retain relevant documents related to the case.
She noted that Dober could face “serious sanctions” and that the attorney work product protection, which would typically shield certain material related to a lawyer’s legal strategy from discovery, no longer applies, potentially giving Coinbase an unusual amount of insight into the FDIC building its case.
The situation is made all the more fraught in that at least one whistleblower leaked information to Sen. Cynthia Lummis (R.-Wyo.) — a staunch critic of crypto debanking — that sensitive documents were destroyed between administrations. Additionally, in recent days, FDIC lawyers have reportedly received threats.
In the past few days, the FDIC has released hundreds of documents related to its pause letters to comply with Reyes' accusations that the agency was acting in "good faith." Some of the documents the FDIC previously released to Coinbase were entirely redacted. The FDIC sought to impose a 15% cap on bank deposits from crypto companies as part of regulatory efforts to limit crypto banking activities.
Last month, FDIC Vice Chair Travis Hill said he expects the agency, which insures deposits in U.S. banks, to take a more “open-minded approach” to blockchain technology and called for more guidance on digital assets.
The agency previously stated it does not discourage financial institutions from working with crypto. In a 2024 Risk Review report, the FDIC said that it and other agencies "continue to emphasize that banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type."
The Block has reached out to Coinbase and the FDIC for comment.
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