The US Senate and House of Representatives are investigating claims that financial regulators under former President Joe Biden abused their authority to cut crypto companies off from banking services, according to a Jan. 24 statement by the Congress.
The alleged scheme, dubbed “Operation Choke Point 2.0” by the crypto community, could spell major consequences for regulatory agencies.
Senator Tim Scott, Chairman of the Senate Banking Committee , said a crypto debanking hearing is now set for February 5, slamming the actions as “un-American.” In his words:
“Under Operation Choke Point 2.0, Biden regulators abused their power and forced financial institutions to cut off services to digital asset firms, political figures, and conservative-aligned businesses and individuals. This is unacceptable. As Chairman of the Senate Banking Committee, I look forward to working with President Trump, industry leaders, and members of both parties to stop these abuses.”
According to Fox Business journalist Eleanor Terrett, among the companies invited are Coinbase, Kraken, Uniswap, Lightspark, and a16z.
A crypto nightmare
Meanwhile, the FDIC is now at the center of the storm after whistleblowers accused the agency of destroying evidence tied to its crypto oversight.
On Jan. 16, Senator Cynthia Lummis fired off a letter to FDIC Chair Marty Gruenberg, demanding the immediate preservation of all documents related to digital assets since January 2022.
“These actions are illegal and unacceptable,” she wrote. Lummis’ letter said that FDIC staff were being closely monitored to prevent any leaks to the Senate. She also alleged that the staff are facing legal threats for speaking out, a decision that “could lead to criminal referrals to the Department of Justice.” Senator Lummis ordered to be shown preserved documents on how the FDIC supervised banks like Silvergate and Signature, two key crypto-friendly banks that collapsed in 2023.
She also demanded inter-agency communications about digital assets and enforcement actions taken against banks working with cryptocurrency companies.
“You must cease and desist the destruction of materials immediately,” Senator Lummis insisted. She emphasized that classifying records as “confidential” would not shield them from Senate oversight.
The term Operation Choke Point 2.0 is borrowed from an Obama-era program that targeted “high-risk” industries like payday lenders and firearms dealers. This new version targeted crypto.
Donald Trump has vowed to dismantle Operation Chokepoint 2.0 during his presidency. He called the alleged crackdown “a coordinated attack on innovation. The industry is being unfairly targeted. We’re putting an end to it.”
Biden administration officials deny any wrongdoing though. In June last year, former White House press secretary Karine Jean-Pierre claimed all of Biden’s regulatory actions were “only aimed at curbing fraud and ensuring financial stability,” not targeting cryptocurrency.
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