Stuart Alderoty, chief legal officer at Ripple, has opined that the Federal Deposit Insurance Corporation (FDIC) tried to send “shockwaves” throughout various banks with its intimidating letters.
“As a former bank GC, these letters scream one message: shut down everything crypto-related ASAP—not just the products and services mentioned,” he said on social media.
This comes after cryptocurrency trading giant Coinbase managed to secure a court order in order to get plenty of unredacted letters that were sent to dozens of banks by the FDIC.
According to Paul Grewal, chief legal officer at Coinbase, there was a “coordinated effort” to put a stop to a wide array of crypto activities, including mundane Bitcoin transactions.
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The recently published letters are supposed to support the crypto industry’s long-standing claims about the so-called “Operation Choke Point 2.0.”
The original “Operation Chokepoint,” which was uncovered by The Wall Street Journal back in 2013, was conducted by the FDIC by issuing informal suggestions to banks in order to clamp down on various high-risk activities that ranged from firework sales to payday loans. The initiative attracted widespread criticism due to violating due process to specifically target disfavored industries.
Cryptocurrency advocates have alleged that a similar playbook is being used against their industry.
Earlier, Alderoty spoke in great detail about the supposed “origin story” of this anti-crypto initiative, arguing that crypto became the new target in 2021 when the Office of the Comptroller of the Currency (OCC) started demanding pre-approval for banks’ crypto activities. The FDIC then followed suit in 2022.
Grewal has called on Congress to investigate this alleged crackdown. “The new Congress should launch hearings on all this without delay,” he said.
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