Operation Chokepoint 2.0: Reports of Widespread Banking Access Denials in Tech Sector

TLDR

• Over 30 tech founders reportedly lost banking access in the last 4 years
• Marc Andreessen claims this is part of “Operation Chokepoint 2.0” targeting crypto and tech companies
• SEC Chair Gary Gensler denied knowledge of Operation Chokepoint 2.0 in Congress
• Coinbase CEO Brian Armstrong suggested Elizabeth Warren’s involvement
• The issue extends beyond US borders, with similar cases reported in UK and Australia

A growing number of tech industry leaders are reporting unexpected terminations of their banking services, with over 30 founders experiencing account closures in the past four years, according to recent statements from prominent industry figures.

Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, brought attention to this issue during an appearance on The Joe Rogan Experience podcast. Andreessen described what he calls “Operation Chokepoint 2.0,” referring to a perceived pattern of financial service denials targeting tech startups and cryptocurrency companies.

The term draws its name from an Obama-era initiative that restricted banking services to certain industries considered high-risk, such as marijuana dispensaries and gun shops. According to Andreessen, the current situation represents an expanded version of this approach, now affecting technology companies and cryptocurrency ventures.

Tesla CEO Elon Musk amplified these concerns on social media platform X, highlighting the reported number of affected tech founders. This prompted additional industry figures to share their experiences, including Custodia Bank CEO Caitlin Long, who reported multiple instances of banking service denials.

The matter reached Congress during a recent hearing where all five voting members of the Securities and Exchange Commission appeared. When questioned about Operation Chokepoint 2.0, SEC Chairman Gary Gensler stated he had never heard the term before, adding another layer to the ongoing discussion.

Coinbase CEO Brian Armstrong joined the conversation, expressing strong criticism of the situation. Armstrong suggested potential involvement from Senator Elizabeth Warren, though no direct evidence has been presented to support this claim.

The process of “debanking,” where financial institutions revoke or restrict services to customers, often occurs without detailed explanation, according to affected parties. Andreessen noted the lack of formal procedures for appeal or reinstatement of services in these cases.

The impact extends beyond individual account closures. According to reports, affected companies face challenges accessing various financial services, including payment processing and insurance coverage, potentially limiting their ability to conduct business operations.

The situation has sparked discussions about due process in banking relationships. Affected parties report receiving little to no explanation for account closures, with limited options for appealing these decisions or seeking alternative services.

This pattern of banking access issues isn’t limited to the United States. Similar cases have been reported in other countries, including the United Kingdom and Australia, suggesting a broader trend in the treatment of technology and cryptocurrency companies by traditional financial institutions.

In the UK, the Financial Conduct Authority (FCA) conducted a review of debanking claims in September 2023. While the FCA found no evidence of accounts being closed primarily due to political views, their findings faced skepticism from affected parties.

Australian cryptocurrency firms have reported similar experiences, with claims of banking service terminations increasing during the COVID-19 pandemic period.

Custodia Bank’s legal challenge against the Federal Reserve represents one formal attempt to address these issues, with oral arguments scheduled for January 21, 2025.

The most recent development in this ongoing situation comes from Long’s public statement about Custodia Bank’s experience, highlighting the continued active nature of these banking access challenges within the technology sector.