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187143 author: molly0xfff@hachyderm.io 21 Feb 14:43
tags: #coinbase #crypto #cryptocurrency #uspol #uspolitics

(Don’t forget that $50 million of those contributions appeared to be blatantly illegal, although Trump is already hard at work making the Federal Elections Commission even less effective than it previously was.)

https://www.citationneeded.news/coinbase-campaign-finance-violation/

187142 author: molly0xfff@hachyderm.io 21 Feb 14:43
tags: #coinbase #crypto #cryptocurrency #uspol #uspolitics

Coinbase says that the SEC has agreed to drop the enforcement case against the company. It only cost them $75 million in political contributions.

182986 author: sun@shitposter.world 17 Feb 17:29
tags: #china #cryptocurrency

180830 author: molly0xfff@hachyderm.io 14 Feb 15:09
tags: #crypto #cryptocurrency #uspol #uspolitics

Sadly, the Congressional majority appears far more eager to spend its political capital making bold statements about debanking only when it applies to crypto billionaires, while dismantling the very agencies best positioned to help debanking victims.

This disconnect between rhetoric and reality matters because it threatens to derail meaningful progress on debanking. Real victims of discriminatory banking practices — racial and religious minorities, low-income individuals, legal but controversial businesses — need systemic solutions and stronger consumer protections. Glimmers of bipartisan agreement emerged during the hearings — with various Congresspeople and witnesses describing potential changes to improve transparency or appeals processes when banks deny services to prospective customers. However, in the end, the Congressional majority appears far more eager to spend its political capital making bold statements about debanking only when it applies to crypto billionaires, while dismantling the very agencies best positioned to help debanking victims.

The path forward requires separating legitimate concerns about discriminatory debanking from the crypto industry's self-serving narrative. It requires acknowledging that proper oversight of high-risk industries isn't the same as improper targeting of vulnerable groups. Most importantly, it requires maintaining and strengthening — not dismantling — the regulatory frameworks that protect consumers from both discriminatory banking practices and predatory financial schemes.

180829 author: molly0xfff@hachyderm.io 14 Feb 15:08
tags: #crypto #cryptocurrency #uspol #uspolitics

Meanwhile, the agency most involved in handling debanking is being dismantled, to cheers from the crypto industry. “Debanking” is a crypto rallying cry only so far as it supports their deregulatory agenda, dropped the second it might result in actual consumer protections.

Meanwhile, the one agency most involved in handling debanking complaints has been forced to pause work and is currently being dismantled.22 At the most recent Senate hearing, Ranking Member Elizabeth Warren came prepared with analysis of thousands of complaints filed with the Consumer Financial Protection Bureau (CFPB) by customers who had lost access to their bank accounts without any explanation or opportunity for appeal.23 Several other Democratic Congresspeople raised the alarm during these hearings about the shutdown of the CFPB and its impact on people who are being shafted by banks, financial services companies, and fintechs, to be met with silence from Republicans on the other side who apparently are not concerned with that kind of debanking — or at least not concerned enough about it to stick their neck out against shadow President Elon Musk — and are only concerned about the alleged debanking of their crypto benefactors.

The crypto industry’s co-opting of legitimate debanking concerns represents a particularly cynical form of regulatory theater. Companies like Coinbase claim to be champions fighting discriminatory banking practices while simultaneously celebrating the shutdown of the CFPB — the very agency most equipped to tackle systemic debanking. When Coinbase CEO Brian Armstrong took to Twitter to celebrate Musk’s attempt to shutdown the CFPB as “100% the right call”, describing the Bureau as “unconstitutional” (it isn’t24) and “an activist organization that has done enormous harm to this country”, he revealed the industry’s true priorities.25 Debanking is suddenly less of concern when the same group that is most equipped to tackle it has proposed consumer protections for crypto customers [I73] that could cause Coinbase to have to reimburse some of the $300 million or so stolen from its customers over the past year alone [I74]. “Debanking” is a crypto rallying cry only to the extent that it supports their deregulatory agenda, to be dropped the second that addressing debanking might result in consumer protection requirements forcing companies like his to treat customers properly.

180828 author: molly0xfff@hachyderm.io 14 Feb 15:06
tags: #crypto #cryptocurrency #uspol #uspolitics

Broadly: despite bipartisan agreement that discriminatory debanking happens to some groups and individuals, there is no agreement about who those people are, or what to do about it.

The good news in all of these hearings and conversations is there seems to be widespread bipartisan acknowledgment that debanking happens, and that it’s a problem. The bad news is that there’s very little agreement around who is suffering as a result of debanking, or what to do about it.

When Democrats like Representative Tlaib and Senator Warren raise concerns about racial or religious minorities being disproportionately denied access to banking services, Republicans remain deafeningly quiet about racial discrimination in access to banking (with the exception of Senate Banking Committee Chair Tim Scott (R-NC), who likened the crypto industry’s supposed debanking to the redlining against his Black grandfather and mother, but who otherwise seemed to treat such issues as a thing of the past).

When some raise concerns about denial of banking services to firearms dealers, others respond that banks should be allowed to individually decide to do or not to do business with whomever they like, and that they should be permitted to protect their banks’ reputations by not serving groups their customer base may disfavor.18a

When people argue that low-income individuals need to be provided banking services, others suggest that no one should force banks to take on the risk of a client who may be more likely to bounce checks or improperly manage their finances.19b

And some even seem to disagree with themselves, taking inconsistent stances based on the victim of the debanking. For example, in September 2023, Senator Ricketts (R-NE) led opposition to the SAFER Banking Act, highlighting money laundering risk and suggesting that limiting banking access to marijuana businesses would help him further his opposition to the marijuana industry (he alleged marijuana causes “significant mental health damage to youth” and “is associated with psychosis, motor vehicle accidents, respiratory problems, and low birth weight”).20 Now, however, he brushes aside money laundering concerns when crypto is involved, and argues that “It undermines the rule of law in our country if regulators start pushing an agenda of what they want to see, what kind of businesses you do business with versus what you’re allowed to do. ... A legal business should not lose access to the banking system just because they deal in firearms or crypto or something like that because a regulator doesn’t like that. That’s just simply wrong. But that’s what we’ve seen of course out of the last two administrations: it was mentioned earlier about Operation Choke Point 1.0 under the Obama administration and firearms dealers for example that were disfavored, were prejudiced against and [regulators] tried to force out of the financial system.”21

As for what to do with it, the leaders of this crusade against supposed crypto debanking can’t even seem to agree among themselves. Some of the Republicans say it’s an issue with the regulators, others say it’s an issue with the bankers. Some want to see sweeping changes at the regulatory level, while others — including the crypto industry’s top-funded Congressperson this cycle, Bernie Moreno (R-OH) — want to just let the free market sort it out, saying “it’s competition that ultimately makes this go away” and “we need more competition in banking, that will fix us.”

180827 author: molly0xfff@hachyderm.io 14 Feb 15:04
tags: #crypto #cryptocurrency #uspol #uspolitics

But the industry’s bold claims that “Operation Choke Point 2.0 is real” are hyperbole intended to mislead. Perhaps they need more time to acquire the proof they claim exists. Perhaps they will just continue to claim it exists, and hope no one notices they haven’t produced it.

However, the crypto industry’s suggestions that these FDIC document releases contain incontrovertible, smoking-gun proof of some Biden administration or regulator directive are hyperbole aimed at misleading those who don’t have the time or interest to read several hundreds of pages of documents (our Congresspeople among them, I suspect). The same types of attempts to mislead are also evident in their treatment of recent comments by FDIC Acting Chair Travis Hill, who had previously served as Vice Chairman of the FDIC since January 2023 and has worked at the agency since 2018. When Hill acknowledged shortly after being installed as Acting Chair that “Over the past few years, there have been various accounts of individuals and businesses associated with the crypto industry losing access to bank accounts without explanation” — a simple statement of fact about complaints that have been made — the industry treated it as confirmation that improper debanking occurred. If they truly believed Hill was confirming improper debanking pressure was being applied by the FDIC, their calls for his resignation should be deafening — after all, he would have held a powerful role in overseeing the very activities he condemns, and he himself stated later in that speech “there is no place at the FDIC for anyone who has pushed — explicitly or implicitly — banks to stop serving law-abiding customers”.

This pattern of selective interpretation and opportunistic outrage is not limited to their treatment of Hill's comments, however. Their attacks on those who have not claimed that crypto companies have been denied bank accounts, and who have not claimed that it’s impossible that there was government pressure to debank crypto companies, but who have simply pointed out that the supposedly firm evidence of a governmental anti-crypto debanking campaign is anything but, demonstrate that their goal is not to uncover the truth about debanking, but to advance their dubious narratives in service of their policy agendas [I74].

It’s also worth noting that the crypto industry's claims of a government-led debanking campaign are essentially unfalsifiable, given the lack of public access to private government documents and correspondence. Yet, despite now having a Republican-controlled House, Senate, and Presidency, with pro-crypto appointees installed throughout regulatory agencies and Elon Musk and his team of interns rooting around in every government database they can get their hands on, and a new FDIC chair apparently willing to order the release of considerably more documents than his predecessor, the industry has still failed to produce any strong evidence to support its claims. This lack of proof, even with the deck stacked in their favor, is telling. Perhaps they will say they just need more time, but if the evidence of a coordinated debanking campaign were as clear-cut as the

180826 author: molly0xfff@hachyderm.io 14 Feb 15:03
tags: #crypto #cryptocurrency #uspol #uspolitics

We are in a situation where reasonable people can look at the same set of documents and some will conclude that the regulators are simply doing their jobs, while others conclude that regulators are improperly pressuring banks to not provide services to those customers at all.

I also think that we are in a world where banking and other financial regulators have been burned by the past collapses of the cryptocurrency industry, which has very much proven itself to be a high-risk industry, and have determined that they need to apply additional scrutiny. Where Representative Green did have a reasonable point was when he stated, “I wouldn't want to be a regulator. It's a tough job because if a bank fails then you didn't do enough and then if it somehow doesn't give you the kind of regulation that you want it's too much.” (Indeed, Representative Hill (R-AR) demonstrated this dichotomy as applied to crypto companies when he opened the hearing by blasting the SEC, stating “one of our witnesses today, Coinbase, an American company registered as a public company with the SEC, was treated poorly and FTX, a criminal organization, wasn't even investigated.”)

Simultaneously, we are in a world where the cryptocurrency industry has proven itself to be violently allergic to any and all regulation — including legitimate regulatory enforcement — and has spent years portraying that regulation as not only unwanted but as improper and even illegal. We are in a world where Congresspeople have campaigned on this very subject. And we’re in a world where crypto companies are hell-bent on establishing that they were victimized by regulators so as to obtain ammunition for their attacks against those regulators, as well as attacks against laws that would limit them from doing

And so in this world, it is not surprising that we are in a situation where different people can look at the same set of documents and some will conclude that the regulators are simply doing their jobs by ensuring banks are doing adequate risk management with high-risk customers, while others conclude that regulators are improperly pressuring banks to not provide services to those customers at all. This is particularly the case because the documents are partially redacted, leaving some sentences and even entire communications open to very different interpretations depending on how the reader’s brain tries to fill in the blanks.

180825 author: molly0xfff@hachyderm.io 14 Feb 15:01
tags: #crypto #cryptocurrency #uspol #uspolitics

So: is this regulatory oversight, or overreach?

Oversight or overreach?
The crypto industry has argued that there does not need to be a plain-text directive from a regulator that “you may not provide banking services to crypto industry customers” to establish that the FDIC was pressuring banks not to serve customers from that industry. I firmly agree. And I found Representative Green’s question about whether anyone has “read some document from the Biden Administration or some regulator indicating that there is an Operation Choke Point 2.0? That said ‘2.0’?” — as though they would have to brand it that themselves in writing in order for such a pressure campaign to exist — to be ridiculous.

Indeed, some evidence presented at the hearings did raise legitimate concerns about regulatory overreach, even if it didn't specifically support claims of an anti-crypto agenda. For instance, Senator Lummis (R-WY) presented a troubling screenshot from a Federal Reserve manual instructing staff to “consider the conduct of the institution and its leadership and whether association with the institution poses undue reputational risk to the Reserve Bank” and asking whether “the institution's leadership associated with controversial commentary or activities?” Such guidance could certainly enable discriminatory treatment based on subjective judgments about what constitutes “controversial” activity, even if it wasn't specifically targeted at cryptocurrency companies, and I was just as delighted as some of those with very different political beliefs to mine when Federal Reserve Chair Jerome Powell promised during his regular Congressional report to ensure it was removed.17

180824 author: molly0xfff@hachyderm.io 14 Feb 15:00
tags: #crypto #cryptocurrency #uspol #uspolitics

There were some conversations with banks about offering depository accounts to crypto companies, which I focused on in particular as this is the root of the industry’s claims.

There are some portions of the FDIC documents that discuss banks merely providing depository banking services to customers in the cryptocurrency industry or associated with crypto, and that was what I was most interested in, as directives from the FDIC to deny these types of services to those customers wholesale would be something much more reasonably described as a Choke Point-style debanking campaign.

In the FDIC’s most recent document release, there were a handful of types of communications that fell into this category. Some were inquiries by banks to the FDIC as to whether the FIL directive to report “activities involving or related to crypto assets” included when they merely offered depository banking services to crypto-related companies. This definitely seems like something the FIL should have been clearer about, as in one case even the FDIC employee who responded wasn’t sure of the answer and had to ask another office (although they instructed the customer to proceed under the assumption that this was not covered by the FIL).8 However, in several other letters, the FDIC clarified that no, merely offering fiat banking services (including loans) to crypto companies did not fall within the scope of the FIL — something it seems they would be unlikely to say if they were indeed trying to systematically prevent banks from serving crypto companies.910 In one case, there was some question about whether a relationship with a bank fell within scope, and the FDIC seemed to dete

Some other documents contained discussions between banks and the FDIC about banks’ crypto-related depository customers, but seemed fairly run-of-the-mill. In one FDIC memo, representatives from the bank and the regulator discussed crypto customers with high cash activity, and the need to apply more diligence to understand those cash transactions since they were high risk. The FDIC representative in that case was explicit that “we are not asking the bank to exit these relationships”, and a bank representative expressed that they believed “most of the recommendations [pertaining to digital asset customers] were really good”.12 A very similar conversation occurred between the FDIC and a bank that was providing banking services to a Bitcoin ATM operator, where a bank representative expressed concern that the FDIC “has made a determination that banking these [redacted] customers is not ok”, and an FDIC representative “reiterated that we are not requiring the bank to exit the business, but to conduct more due diligence, look at the potential red flags, and provide the bank’s board with the results. The decision whether or not to continue to bank these customers should be a business decision made by the board after review of the additional information.”13 In a few cases there were broad questions from the FDIC to banks they already knew had crypto-related depository and loan customers, for example a few days after the FTX collapse, when an FDIC case manager asked about “any trends

There were also conversations about banking relationships with cryptocurrency companies that involved not only depository accounts but “for benefit of” (FBO) accounts: where a company holds customer funds in an account with the bank for the benefit of their customers. In these cases, the FDIC asked a number of fairly standard questions pertaining to account structure, size, capital requirements, and so on.15

In several cases, banks described closing accounts belonging to crypto customers, but these seemed to me to be of the banks’ own volition and as a result of their internal risk management decisions.1016

180822 author: molly0xfff@hachyderm.io 14 Feb 14:58
tags: #crypto #cryptocurrency #uspol #uspolitics

However, there is no shortage of extremely concerning replies from banks to these questions about the banks’ own planned crypto offerings and partnerships with crypto companies, suggesting the FDIC was more than justified in making these inquiries. Just a few highlights:

The narrative indicates that the Bank will only do business with stablecoins that meet the Bank's internal standards; however, no standards have been developed. (pg 44)

The form's responses to principal ownership, length of time in business, and regulatory oversight of the company do not accurately reflect the entity that the bank is contracting with, the entity's organizational structure, or affiliate services. [begin highlight] The form states that [redacted] has been operating since [redacted]; however, [redacted], the entity that the bank contracts with did not exist in [redacted]. [end highlight] The form also states that the regulators

these customer expectations were generated from [redacted] and included little to no support. [begin highlight] Furthermore, those projections were likely generated when bitcoin prices were rapidly appreciating in comparison to the US Dollar and did not consider any type of range or pullback in the market. [end highlight] Management should revisit the report and consider a range of results that incorporate different levels of adoption and transaction volume.

The risk assessment is not commensurate with the potential risk exposure posed. Management approved a Bitcoin Program risk assessment prepared by [redacted] with minimal edits, which lacked independence, lacked a discussion of controls in key areas, or outlined controls/mitigants that did not exist or were inaccurate.

180821 author: molly0xfff@hachyderm.io 10 Jan 2025 21:09
tags: #crypto #cryptocurrency

Having failed to obtain proof of "Operation Chokepoint 2.0" with their FOIA requests, Coinbase is going with the second best option: loudly proclaiming that they have such proof, and hoping no one will bother to dig through the rather dry emails between banks and banking regulators. Fortunately, I have several years of practice in digging through dry documents crypto industry figures hope no one will actually read.

The crypto industry has continued to doggedly pursue proof of their enormously dubious claims that the FDIC and other financial regulators have been engaging in “Operation Chokepoint 2.0” [I71]. Coinbase has been busy filing Freedom of Information Act requests, hoping to secure documents that would prove that the FDIC was involved in such a nefarious campaign to “de-bank” the crypto industry by ordering banks to deny accounts or other services to anyone involved with the sector. Having failed to obtain such proof, Coinbase is going with the second best option: loudly proclaiming that they have such proof, and hoping no one will bother to dig through the rather dry emails between banks and banking regulators. Fortunately, I have several years of practice in digging through dry documents crypto industry figures hope no one will actually read.

“In short, the contents are a shameful example of a government agency trying to cut off financial access to law-abiding American companies,” wrote Coinbase Chief Legal Officer Paul Grewal on Twitter.21 In long, the documents actually reflect mostly requests for more information about blockchain-related services provided or used by banks themselves, where the FDIC was seeking to do things like “gain an understanding of how the bank will ensure continued safe and sound operation as this activity is implemented”. Where the FDIC did request banks pause activities, it was again where those banks wer

180820 author: molly0xfff@hachyderm.io 10 Jan 2025 21:07
tags: #crypto #cryptocurrency

The CFPB is seeking comment on a proposed interpretive rule that would clarify that cryptocurrencies and some in-game video game currencies fall under the EFTA, which could require crypto and video game companies to reimburse scam victims.

The Consumer Financial Protection Bureau has proposed a new interpretive rule that would require both cryptocurrency platforms and video game companies to reimburse customers for stolen digital assets under the Electronic Fund Transfer Act (EFTA). This is a marked departure from the current sad state of affairs, where crypto platforms that receive complaints from customers whose accounts were emptied typically shrug and say “guess you shouldn’t have fallen for a scam”, then refer them to local law enforcement who in turn shrug and say “we can’t trace stolen crypto”. It’s also a big difference for some video game companies, whose responses to stolen in-game funds vary dramatically based on the game company and, seemingly, the mood of whichever customer support representative you are lucky or unlucky enough to reach on any given day.

The CFPB is not alone in their interpretation of the EFTA. A federal judge interpreted the law the same way in a decision in the Southern District of New York, stemming from a class action lawsuit that was filed after flawed implementation of multi-factor authentication by the Uphold cryptocurrency exchange contributed to multiple customers losing tens of thousands of dollars in assets. Although Uphold never wound up paying much in damages, the opinion in the case included that “personal asset accounts that are investment accounts like ... the cryptocurrency accounts at issue here, are accounts covered by the EFTA”, and noted that the EFTA does n

180819 author: molly0xfff@hachyderm.io 10 Jan 2025 21:05
tags: #crypto #cryptocurrency

Coinbase is being allowed interlocutory appeal in their lawsuit from the SEC, which could establish meaningful precedent if the Second Circuit agrees to hear it.

Coinbase is being allowed to appeal to the Second Circuit the March 2024 order by New York Judge Katherine Polk Failla that the SEC has plausibly argued that some transactions met the definition of investment contracts, and thus fell under their purview [I54]. Known as an “interlocutory appeal”, this request to appeal was made while the case still remains in its early stages, and such requests are somewhat rarely granted. However, Failla wrote, “Although the Court does not appreciate, and will not co-sign, Coinbase’s efforts to cast aspersions on the SEC’s approach to crypto-assets, the fact remains that these conflicting decisions on an important legal issue necessitate the Second Circuit’s guidance.” She also noted opinions in other cases in the district involving Terraform Labs and Ripple, where judges may have issued conflicting rulings. She continued, “The Court agrees with Coinbase that ‘[t]he conflict between Ripple on the one hand and Terraform and the [March 2024 Coinbase] Order on the other is symptomatic of the more fundamental difficulty of applying Howey to crypto transactions.’” Failla has stayed the rest of the case pending either a decision from the Second Circuit to deny the request for appeal, or a decision on the appeal itself.14 If the Second Circuit takes the case, it could be very meaningful for the crypto world, which has been battling the SEC over the “securities” determination for years now. However, the industry has put significant efforts towards

180818 author: molly0xfff@hachyderm.io 10 Jan 2025 21:03
tags: #crypto #cryptocurrency

Gemini, the cryptocurrency exchange owned by the Winklevoss twins, has just paid $5 million to settle a lawsuit from the CFTC. (Not to be confused with their OTHER lawsuit from the SEC.)

The Winklevoss twins’ Gemini cryptocurrency exchange will pay $5 million to settle a lawsuit from the CFTC, which alleged that the company had misled the regulator about how they would prevent Bitcoin price manipulation in the Bitcoin futures contract for which they were seeking approval.9 The case at one time threatened to turn criminal, as prosecutors in late 2017 or early 2018 seized laptops belonging to former executives, but criminal charges were never filed.10 The CFTC case is separate from the lawsuits against Gemini pertaining to its “Earn” product, which the SEC alleges was an unregistered securities offering, and which raised billions from investors before pausing withdrawals in November 2022 amid the broader crypto market upheavals and Genesis’ insolvency. One of those lawsuits, filed by the New York Attorney General, resulted in an agreement by Gemini to return at least $1.1 billion to customers [I60]. Another, from the SEC, is ongoing [I17].

180817 author: molly0xfff@hachyderm.io 10 Jan 2025 21:00
tags: #crypto #cryptocurrency

After 21 months in extradition limbo, founder of the collapsed Terra stablecoin Do Kwon has been extradited to the United States to face serious fraud charges over his operation of the scheme. Don't hold your breath, though: the trial won't begin for another year.

Do Kwon
After almost two years in extradition limbo, Terra founder Do Kwon has been extradited to the United States. To recap: in May 2022, Kwon’s Terra stablecoin and associated Luna crypto token crashed catastrophically, ruining many who had been tempted by supposedly risk-free 19–20% APY they were promised in exchange for depositing their dollar-pegged Terra stablecoins (UST) into a protocol called Anchor. Side note: If someone promises you a risk-free 20% annual yield if you just let them hold on to your dollars for you (or turn your dollars into stablecoins and then let them hold on to your stablecoins for you), the risk that that you never see those dollars again is in fact very high.

Despite tweeting “I am not ‘on the run’ or anything similar” [I4], Kwon was in the wind by the time South Korea (Kwon’s home country, also home to many Terra victims) issued a warrant for his arrest in September 2022 [W3IGG]. The United States SEC followed up with civil fraud charges in February 2023 [W3IGG]. In March 2023, Kwon was nabbed in a Montenegrin airport [I23], where he was using a forged passport to try to travel to Dubai.a That same day, US prosecutors unsealed a criminal indictment against him. Kwon spent the next 21 months in a Montenegrin jail, during which a string of more than twenty court rulings and appeals saw him approved for extradition first to the US, then to South Korea, then the US again in a process that Protos wrote was “single-handedly ripping Montenegro apa

Montenegro has recently been able to reach its first “final verdict” that was actually final enough to see Kwon actually board a plane, and he arrived in the United States to appear in court on January 2. This was celebrated by Prime Minister Milojko Spajić, who tweeted that he believed the extradition would “put an end to pre-election manipulations and attempts to stage a scandal”.2 Kwon is probably not as happy about the outcome as Spajić. Although he fought both extradition to the United States and South Korea, he seemed particularly opposed to the idea of winding up in the United States, with his lawyers at one point arguing that Montenegrin courts had falsified information so as to suggest that the United States requested Kwon's extradition before South Korea, and stating that the facts “absolutely and one hundred percent give priority to Korea.”3 [I56] He’d tried again to halt this extradition, too, by again claiming that Minister of Justice Bojan Božović had illegally granted it, but to no avail.4

The eight fraud, market manipulation, and money laundering charges carry hefty maximum sentences,56 and Kwon stands accused of causing $40 billion in losses to at least hundreds of thousands, if not more than a million people.7 He’s entered a not guilty plea, as is to be expected this early on, and is likely to do a whole lot more sitting around in a jail cell as prosecutors and defense attorneys sift through discovery. “Sounds like we’re going to be backing up a U-Haul to

180816 author: molly0xfff@hachyderm.io 10 Jan 2025 20:57
tags: #crypto #cryptocurrency

Newsletter: Terra founder Do Kwon is finally extradited, the CFPB proposes crypto consumer protections, and Polymarket reaches new lows.

https://www.citationneeded.news/issue-73/

180815 author: molly0xfff@hachyderm.io 14 Feb 14:56
tags: #crypto #cryptocurrency #uspol #uspolitics

Some witnesses, including Coinbase Chief Legal Officer Paul Grewal, have slammed the FDIC for asking questions of banks and crypto companies pertaining to their crypto activities.

Most of the communications between the FDIC and banks looking to offer crypto products consisted of questions about the specifics of their offerings, and then ongoing discussions about their replies. Coinbase’s Grewal was among the witnesses for the House hearing, and he suggested that the FDIC asking questions was itself improper: “Over and over again the FDIC bludgeoned the banks with an onslaught of examinations and questions until the banks relented under the pressure.” Grewal’s fellow witness Austin Campbell, the CEO of the WSPN stablecoin company, made similar claims, stating that the FDIC documents “indicate” that “they will just ask you questions endlessly and tell you that you need to get permission from the regulator to engage in these activities and helpfully they’ll never stop asking questions. Right? This could be two years straight of questions with no end point, no finish line, no clear articulation as to what they’re trying to learn and at some point it just becomes a repetitive cycle and it’s clear the answer is no.”

The FDIC documents don’t support the witnesses’ characterizations. While there are long lists of detailed questions directed towards banks considering launching crypto products of their own, the inquiries seemed to me to be fairly reasonable, as do follow-up questions about banks’ replies. None of the back-and-forth conversations published in the FDIC’s latest release reflect the agonizing, years-long interrogations that either executive describ

180814 author: molly0xfff@hachyderm.io 14 Feb 14:55
tags: #crypto #cryptocurrency #uspol #uspolitics

They have been making similar claims about a new, nearly 800-page dump of FDIC communications with banks, which I analyze in detail.

Once again, the industry conflates supposed crypto debanking with regulators scrutinizing banks planning to themselves offer crypto products.

Once again, the crypto industry is claiming that this lengthy trove of documents contains a smoking gun proving that the FDIC was forcing banks not to serve the crypto industry. Once again, the reality of the documents does not support such a claim.

As with the last release, many of these documents are communications between the FDIC and banks that were not to do with banks denying depository accounts to clients in or associated with the crypto industry (which could be categorized as debanking), but rather with banks trying to offer crypto services themselves, including by adding bitcoin purchases to their mobile banking apps or installing bitcoin ATM kiosks in their lobbies. Questions around these activities seem well within banking regulators’ remit, and it seems deeply misleading to me for crypto companies complaining that their industry is being debanked to, when asked for supporting evidence, point to documents describing banks being questioned about or asked to pause programs to sell customers bitcoin in their online banking portals. It’s also entirely understandable to me that the FDIC seems particularly concerned in multiple communications about various banks potentially implying that their crypto offerings are subject to FDIC insurance, given that victims of several companies that collapsed in 2022 had been under this false impression [I1, 41, several W3IGG entries].

180813 author: molly0xfff@hachyderm.io 14 Feb 14:53
tags: #crypto #cryptocurrency #uspol #uspolitics

The crypto industry has in the past claimed to have obtained firm proof of “OCP 2.0” via FOIA-ed FDIC documents, but as I wrote then, those documents did not support their bold claims.

https://hachyderm.io/@molly0xfff/113806105979628917

Having failed to obtain proof of "Operation Chokepoint 2.0" with their FOIA requests, Coinbase is going with the second best option: loudly proclaiming that they have such proof, and hoping no one will bother to dig through the rather dry emails between banks and banking regulators. Fortunately, I have several years of practice in digging through dry documents crypto industry figures hope no one will actually read.

#crypto #cryptocurrency

180812 author: molly0xfff@hachyderm.io 14 Feb 14:52
tags: #crypto #cryptocurrency #uspol #uspolitics

Even Republicans and their invited witnesses — to Senator Kennedy’s apparent surprise — disagree as to whether denial of banking services is some sort of nefarious government campaign or just banks making their own decisions.

180811 author: molly0xfff@hachyderm.io 14 Feb 14:45
tags: #crypto #cryptocurrency #uspol #uspolitics

When it comes to claims of “Operation Choke Point 2.0”, a supposed government campaign to improperly pressure banks to not provide services to the cryptocurrency industry wholesale, little has emerged in the way of proof of such a campaign (despite the industry’s claims).

Representative Al Green (D-TX) was blunt in his opening statement, describing “Operation Choke Point 2.0” as “a fake program never initiated by the Biden Administration” and arguing that regulators asking banks to “exercise caution” and “consider the risk associated with the cryptocurrency industry does not amount to debanking”.

Representative Tlaib (D-MI) also echoed this point: “I’d like to discuss facts motivating today’s hearing and Coinbase’s and its consultants’ complaint against the FDIC. The claim that ‘starting’ — you’re probably familiar with this — ‘starting in 2022, federal financial regulators have taken concerted steps designed to debank the digital asset industry.’ But what’s interesting about this timeline, and maybe Ranking Member you’d find this interesting, what actually happened around 2022? Folks are forgetting. I mean they were going to play dumb but we’re not — we know what happened. Investors lost $2 trillion during what we call ‘crypto winter’, and a whole host of crypto and digital asset companies went belly up including FTX and Celsius. And in early 2023 we saw Silicon Valley Bank, Signature Bank and Silvergate fail, with crypto playing a huge role in it.”

180810 author: molly0xfff@hachyderm.io 14 Feb 14:44
tags: #crypto #cryptocurrency #uspol #uspolitics

On the face of it, there seemed to be bipartisan agreement that debanking is a real issue that needs to be addressed. But scratch the surface, and the two sides were discussing radically different issues.

Last week, Congress held two hearings about Americans losing access to banking services. In theory, everyone agreed this was a serious problem requiring urgent attention. In practice, they weren't even discussing the same issue. Democrats described Muslim Americans broadly reporting denial of banking services, immigrants locked out of the banking system for wiring money overseas or participating in traditional community lending practices, and low-income individuals being forced to pay high fees simply because they didn’t carry a balance in their bank accounts. Republicans and their crypto-friendly Democratic allies were instead laser-focused on a different claimed victim: the cryptocurrency industry, which alleged it was being systematically cut off from banking services through a shadowy government pressure campaign dubbed “Operation Choke Point 2.0”.

180809 author: molly0xfff@hachyderm.io 14 Feb 14:43
tags: #crypto #cryptocurrency #uspol #uspolitics

$130 million in Congressional spending by the crypto industry helped put their claims of systemic debanking by the Biden administration and financial regulators at the top of the to-do lists for both the House and the Senate, who held hearings last week on the topic.

As I’ve discussed before [I71, 73, 74, 76], powerful figures in and outside of the crypto industry have been broadly claiming that the FDIC and other financial regulators have been engaged in a nefarious pressure campaign to force banks not to offer services to crypto companies or people associated with crypto. Aided by over $130 million in crypto industry spending on Congressional races this cycle, these claims have made their way to the top of some Congresspeople’s lists of concerns. The Senate Banking Committee held a hearing on February 5 titled “Investigating the Real Impacts of Debanking in America”, and the House Financial Services Committee held one the following day, rather more pointedly dubbed “Operation Choke Point 2.0: The Biden Administration’s Efforts to Put Crypto in the Crosshairs”. On the morning of the Senate hearing, the FDIC also released a nearly 800-page document containing 175 records of correspondence between the FDIC and banks and other financial institutions pertaining to crypto.

180808 author: molly0xfff@hachyderm.io 14 Feb 14:42
tags: #crypto #cryptocurrency #uspol #uspolitics

Newsletter: Dubbing it “Operation Choke Point 2.0”, cryptocurrency companies have co-opted legitimate concerns about banking discrimination to fight regulation — and Congress is buying it.

https://www.citationneeded.news/crypto-industrys-debanking-smokescreen/