White House Crypto Czar David Sacks Likely to Probe Alleged Regulatory ‘Choke’ on Industry

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As a seasoned researcher with extensive experience delving into complex financial and regulatory issues, I find the allegations surrounding the apparent targeted campaign against crypto-related enterprises deeply concerning. The parallels drawn to Operation Choke Point are chilling, and if true, they represent a significant blow to the principles of fair competition and innovation that our democratic system should uphold.

The move follows a series of public accusations from industry executives, who allege that U.S. regulatory agencies have systematically targeted crypto-related enterprises, leading to forced bank closures, bankruptcies, and widespread operational disruption.

Although the U.S. government hasn’t publicly acknowledged it yet, key figures in the cryptocurrency field argue that the signs point strongly to a reemergence of a program similar to Operation Choke Point from 2013. This initiative, launched under President Obama, aimed to cut off banking ties with businesses deemed “high-risk.” Now, sources within the loop suggest a revitalized and broadened version is in motion, specifically targeting companies dealing with blockchain technology.

Sacks has recently been tapped as President-elect Trump’s pick for White House ‘A.I. & Crypto’ Czar”. His decision to examine these claims directly follows public statements from former Silvergate Bank Chief Technology Officer Chris Lane, who alleges regulatory pressure destroyed the institution. According to Lane, Silvergate survived a severe deposit run triggered by the collapse of crypto exchange FTX in November 2022, only to be undermined by regulatory directives that severely limited its ability to hold crypto-related dollar deposits. He has stated that “FTX didn’t kill us; our regulators did,” casting regulators’ actions as a decisive factor in pushing Silvergate out of business.

As an analyst, I’ve noticed a recurring concern among prominent figures in the crypto industry. Charles Hoskinson, co-founder of Cardano, Brian Armstrong, CEO of Coinbase, and Gabriel Abed, chairman at Binance, have expressed similar grievances. They argue that traditional banking partners, under the pressure of regulatory oversight, have chosen to terminate accounts or deny services to cryptocurrency clients. These industry leaders claim that this perceived practice has stifled innovation, forced entrepreneurs abroad, and restricted legitimate business activities within the United States.

In response, Sacks has promised to examine thoroughly the increasing number of reliable reports claiming harm. Although Sacks hasn’t provided a detailed roadmap for his investigation, experts believe he will initiate by collecting testimonies, examining financial records, and seeking disclosures from regulatory bodies as a first step. Given the intricacy of the accusations, it is anticipated that he may also ask for unredacted versions of crucial documents currently hidden under redactions. Industry experts mention that Coinbase, for instance, has already submitted Freedom of Information Act (FOIA) requests and made public heavily redacted “pause letters” they received from the Federal Deposit Insurance Corporation (FDIC). These letters hint that U.S. banks were directed to halt crypto services without clear instructions, which could serve as potential starting points for Sacks’s investigations.

Additionally, there’s increasing attention from lawmakers on this issue. Representatives such as French Hill have advocated for thorough investigations, hinting that the incoming Congress may take steps to “stop, undo, and scrutinize” these alleged practices. If Sacks collaborates with legislative bodies, it could broaden the inquiry’s purview, granting it a stronger influence over regulatory channels.

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2024-12-07 14:48