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Crypto founders have reported losing business accounts, with personal accounts also subject to debanking.
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Debanking has been a major problem for crypto firms but is more pronounced for smaller projects lacking financial and legal resources.
Ledn co-founder Mauricio di Bartolomeo offered several affordable solutions for small crypto startups to avoid debanking while maintaining the regulatory compliance key to fostering relationships with financial institutions.
The Ledn co-founder told Cointelegraph that startups should seek cost-effective legal counsel from law firms that offer special startup pricing. Small firms could also seek banks in other countries or operate the business on crypto guardrails until the firm can establish traditional banking partnerships. Bartolomeo stressed the importance of regulatory compliance:
“Number one is do not cut corners on compliance. The second you cut corners on compliance, you have debanked yourself. So do not cut corners on anti-money laundering (AML) or know-your-customer (KYC) compliance.”
Ledn was one of the many crypto firms debanked during Operation Chokepoint 2.0. Luckily for the company, it had a diversified set of banking partners to weather the storm, which allowed it to focus on regulatory compliance to avoid unwanted scrutiny from regulators.
Ledn received a debanking notice in 2020. Source: Ledn LinkedIn page
Related: Judge slams FDIC’s ‘lack of good-faith’ in censoring crypto letters to banks
Industry leaders come out against Operation Chokepoint
In November, crypto executives took to social media to share their debanking experiences after venture capitalist Marc Andreessen drew attention to the debanking operation on an episode of The Joe Rogan Podcast.
Andreesen claimed that over 30 tech founders were debanked during Operation Chokepoint 2.0. The venture capitalist also said the Biden administration stifled innovation in AI by warning institutional investors that the government would not provide regulatory approval for new AI startups.
Court documents made public by a Freedom of Information Act (FOIA) request revealed that the Federal Deposit Insurance Corporation (FDIC) asked some banks to pause crypto activity in 2022.
Much of the FDIC documentation was redacted, drawing sharp criticism from Judge Ana Reyes, who ordered the FDIC to produce and submit more transparent documents by January 2025.
The FDIC also pressured banking institutions serving crypto clients to abandon those operations. According to venture capitalist Nic Carter, the FDIC, at the direction of the Biden administration, deliberately killed Silvergate Bank to destroy its crypto clientele.
Carter argued that the bank was still solvent at the time it was liquidated and only shut down following threats from government regulators. The venture capitalist also said the FDIC forced the bank to cap crypto deposits at 15%.
Magazine: Lawmakers’ fear and doubt drives proposed crypto regulations in US
This article first appeared at Cointelegraph.com News
