FDIC

The FDIC is accused of omitting multiple crypto-related "cease and desist" letters in the lawsuit supported by Coinbase

ChainCatcher news, according to Cointelegraph, the Federal Deposit Insurance Corporation (FDIC) has been accused of omitting multiple cryptocurrency-related "suspension letters" sent to banks in a Coinbase-supported Freedom of Information Act (FOIA) lawsuit. A report submitted by History Associates to the federal court in Washington, D.C. on January 17 indicated that the FDIC "may have overlooked other suspension letters" and plans to update the lawsuit based on this. Public reports have claimed that the FDIC is "systematically obstructing FOIA requests," resulting in at least 150 related documents not being released. The 25 FDIC letters that have been made public suggest that financial institutions should suspend cryptocurrency operations until regulatory reviews are completed, which the cryptocurrency industry views as an action to cut off banking services to related businesses ("Operation Chokepoint 2.0").Coinbase Chief Legal Officer Paul Grewal stated on January 16 that the lawsuit seeks to obtain all suspension letters confirmed by the Office of the Inspector General, but accused the FDIC of limiting its search to the letters in the report, potentially overlooking others. Grewal added that when asked to correct and stop the wordplay, the FDIC claimed it would take at least a year.In a status report on January 17, the FDIC responded that it has provided all relevant documents and conducted a search of letters shared with the Office of the Inspector General from March 2022 to May 2023, in accordance with the FOIA request. The agency stated that History Associates has no reasonable basis to believe that letters beyond this scope and timeframe belong to the original FOIA request and added that these letter requests are being processed as separate FOIA requests for expedited review.

The letter obtained by Coinbase shows that the FDIC had secretly halted the cryptocurrency business of American banks

ChainCatcher news, according to CoinDesk, based on communication records obtained by a research firm commissioned by Coinbase, it was revealed that in 2022, the Federal Deposit Insurance Corporation (FDIC) suspended or blocked cryptocurrency banking operations in many U.S. banks.The research institution hired by Coinbase, History Associates Inc., filed a lawsuit against the FDIC and the Securities and Exchange Commission (SEC) in June of this year, ultimately gaining access to some internal communication records of the FDIC. A large number of heavily redacted documents released on Friday show that this banking regulatory agency had halted digital asset-related products and services offered or planned by several banks.According to one of the 23 letters shared by the cryptocurrency exchange, the regulator wrote: "We urge you to suspend all activities related to crypto assets. The FDIC will notify all banks under its supervision when it makes a decision regarding the regulatory expectations for engaging in activities related to crypto assets."Coinbase Chief Legal Officer Paul Grewal believes that these letters are conclusive evidence that crypto companies have been systematically cut off from banking services by regulators. Paul Grewal stated, "The FDIC has developed a coordinated plan and executed it without hesitation, depriving a legitimate U.S. industry of banking services. This should give everyone pause."

The FBI has recovered $8.3 million misappropriated by a former Kansas bank CEO in a cryptocurrency account

ChainCatcher news, according to Fortune, the Federal Bureau of Investigation (FBI) successfully recovered $8.3 million that was embezzled by the former CEO of a Kansas bank, which was stored in a cryptocurrency account in the Cayman Islands. On Monday, November 4, 2024, in a federal court in Kansas, 30 community bank shareholders erupted in relieved sobs upon learning they would fully recover their investments.In August of this year, former CEO of Heartland Tri-State Bank in Kansas, Shan Hanes, was sentenced to 24 years in prison for embezzling $47 million in customer funds and transferring it to a cryptocurrency account operated by scammers. Prosecutors stated that Hanes also stole funds from churches, investment clubs, and his daughter's college fund, losing $1.1 million of his personal money in the scheme. Hanes's bank was closed and sold by federal regulators due to depleted funds. The $47.1 million in customer deposits was insured and compensated by the Federal Deposit Insurance Corporation (FDIC). However, the $8.3 million investment of the 30 community bank shareholders was once thought to be lost.Prosecutors indicated that Hanes fell victim to a scam known as a "pig butchering" scheme. In this type of scam, a third party gains the victim's trust and over time persuades them to invest all their funds in cryptocurrency, after which the money disappears immediately. Hanes began purchasing cryptocurrency he believed was worth $5,000 at the end of 2022, communicating with someone who contacted him via WhatsApp. By the summer of 2023, he had transferred $47.1 million in customer funds through 11 wire transfers in just 8 weeks.
ChainCatcher Building the Web3 world with innovators