FDIC’s Intimidating Letters Shake Up Crypto Industry, Ripple CLO Claims
Stuart Alderoty, the chief legal officer at Ripple, has raised concerns about the Federal Deposit Insurance Corporation (FDIC) sending out intimidating letters to various banks, attempting to disrupt crypto-related activities.
In a recent social media post, Alderoty expressed his views on the matter, stating that the FDIC’s letters were aimed at urging banks to shut down all crypto-related operations immediately, not just the specific products and services mentioned in the correspondence.
Coinbase, a prominent player in the cryptocurrency trading industry, recently obtained court orders to access unredacted copies of the letters sent by the FDIC to multiple banks.
According to Paul Grewal, the chief legal officer at Coinbase, there seems to be a coordinated effort to curb a wide range of crypto activities, including basic Bitcoin transactions.
The released letters are believed to provide evidence supporting the claims of the crypto industry regarding the alleged “Operation Choke Point 2.0.”
Back in 2013, the original “Operation Chokepoint” initiative by the FDIC aimed to discourage high-risk activities such as firework sales and payday loans through informal suggestions to banks. This approach faced criticism for targeting specific industries without due process.
Crypto advocates now argue that a similar playbook is being used against their industry, leading to increased scrutiny and potential restrictions.
Alderoty has highlighted the timeline of events, suggesting that the crackdown on crypto activities intensified in 2021 when the Office of the Comptroller of the Currency (OCC) started requiring pre-approval for banks engaging in crypto-related operations. The FDIC followed suit in 2022, escalating the regulatory pressure on the crypto sector.
Grewal has urged Congress to investigate this crackdown on crypto activities, calling for immediate hearings to address the concerns raised by industry players.