Proof of Operation Chokepoint 2.0

Newly released documents from the FDIC show a concerted federal effort to de-bank crypto companies, showing long-held theories were correct.

Dec 6, 2024, 7:49 p.m. UTC

So, now we know. Operation Chokepoint 2.0 was real.

There really was a co-ordinated federal government effort to de-bank crypto following the collapse of three mid-sized crypto-friendly lenders (Signature, Silvergate and Silicon Valley Bank) in March 2023. The crypto industry, led by VC-commentator Nic Carter, has long suspected and railed against de-banking. But, until today, we didn’t have much documentary evidence. Friday morning, internal communications at the Federal Deposit Insurance Corp were released after a research firm (History Associates Inc.) hired by Coinbase sued to get them uncovered. “The heavily-redacted documents emerged on Friday, showing the banking regulator slamming the brakes on lenders offering or considering products and services in the digital assets sector,” CoinDesk’s Jesse Hamilton wrote in his report today. 

"We respectfully ask that you pause all crypto asset-related activity," the FDIC wrote in one of 23 internal letters released by Coinbase. "The FDIC will notify all FDIC-supervised banks at a later date when a determination has been made on the supervisory expectations for engaging in crypto asset-related activity."The FDIC and other regulators have long denied they pressured the three struggling banks to stop banking crypto companies, many of which were suffering following the collapse of FTX and others in late-2022.

"The letters show that this was no conspiracy theory at all, that this was not just rank speculation or the musings of a paranoid industry," Grewal told Hamilton. "There was a concerted plan on the part of the FDIC that they carried out — without any reluctance — to deny banking services to a legal American industry. That should give everyone great pause."

Debanking has been a hot issue recently, after mega-VC Marc Andreessen discussed Operation Chokepoint 2.0 on Joe Rogan’s podcast. The House Committee on Financial Services heard testimony from several crypto leaders this week attesting to difficulties gaining banking services. The heavily redacted letters show FDIC demanding onerous compliance information while being unclear as to what was actually required of the banks before they could approve the provision of financial services to the businesses. Hamilton writes that some letters show the “agency wasn't yet sure what regulatory filings would even be required before it could green-light crypto business.”

Grewal said Coinbase will petition the court to allow the documents to be released unredacted.

Aside from hurting the crypto industry, critics argue financial services are a fundamental right and that the federal government should not be able to effectively outlaw legal businesses. Operation Chokepoint 2.0 is a reference to an official Obama Administration policy to restrict financial services to payday lenders, gun sellers and other “undesirable” businesses.

It’s now clear that de-banking was as much a matter for crypto as it was for porn, which says a lot about the current administration’s attitude towards it.

Benjamin Schiller

Ben Schiller is CoinDesk's managing editor for features and opinion. Previously, he was editor-in-chief at BREAKER Magazine and a staff writer at Fast Company. He holds some ETH, BTC and LINK.