Do you fear an "Operation Choke Point 2.0" in your country? (Poll)

[Peter90]

DoJ Charges Crypto Exchange KuCoin Over Billions In Criminal Funds

United States Justice Department (DoJ) officials unsealed an indictment against cryptocurrency exchange KuCoin and two of its founders for "conspiring to operate an unlicensed money transmitting business" and violations of the Bank Secrecy Act.

U.S. Attorney Damian Williams said:
“As today’s Indictment alleges, KuCoin and its founders deliberately sought to conceal the fact that substantial numbers of U.S. users were trading on KuCoin’s platform.

Indeed, KuCoin allegedly took advantage of its sizeable U.S. customer base to become one of the world’s largest cryptocurrency derivatives and spot exchanges, with billions of dollars of daily trades and trillions of dollars of annual trade volume.  But financial institutions like KuCoin that take advantage of the unique opportunities available in the United States must also comply with U.S. law to help identify and drive out crime and corrupt financing schemes.  KuCoin allegedly deliberately chose not to do so.

As alleged, in failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over $5 billion and sending over $4 billion of suspicious and criminal funds.

Crypto exchanges like KuCoin cannot have it both ways.  Today’s Indictment should send a clear message to other crypto exchanges: if you plan to serve U.S. customers, you must follow U.S. law, plain and simple.”

zerohedge.com


On the Tether Gold thread someone said Kinesis shouldn't do KYC because crypto people don't like it.
The KuCoin story shows why currently any crypto business in the USA should do KYC...

[Peter90]

Kraken: No services to New York and Washington residents

At this time, Kraken does not offer service to residents of:
Washington state (WA)
New York (NY)

While we strive to offer our services to all US residents, the cost of maintaining regulatory compliance in some states can be very high, forcing us to make hard choices about whether cost justifies doing business in the state.

support.kraken.com

Operation CK2:
Authorities can hinder crypto businesses by increasing costs for complying with regulations

[Peter90]

It’s not just the SEC.
The Federal Reserve leads the Operation Chokepoint 2.0 crackdown on crypto.

Custodia Bank has sued the Fed because it failed to approved Custodia's application for a Fed "master account."

A Fed "master account" is essentially a bank account for banks, allowing banks to use the Fed system for check clearing, wire transfers and ACH payments.
Federal law requires the Fed to grant a master account to any federal or state chartered depository institution.
Custodia is a Wyoming chartered depository institution.

It usually takes 5-7 business days for the Fed to approve a master account.
Custodia waited with no response from the Fed to its master account application for 20 months. 
So, Custodia was left with no option but to sue the Fed.
The Fed then denied Custodia’s application for a master account 8 months after the lawsuit was filed. 


Custodia has turned up some fascinating details in the discovery it has conducted against the Kansas City Fed and the main Fed in DC.
A tangled web indeed:
In connection with Custodia's application for a master account, the Kansas City Fed conducted a comprehensive examination of Custodia and submitted its Report of findings to the main Fed in DC.
What happened with that Report tells you all you need to know about how our government is treating crypto.

Capital
After a comprehensive investigation, the Kansas City Fed's Report concluded that Custodia’s capital was “adequate.” 
Without any additional investigation, the Fed in DC changed the Report to say there was a “lack of a robust capital requirement framework” at Custodia.

Risk Management
The Kansas City Fed concluded that Custodia had “strong risk management” practices.
The Fed in DC changed the Report to say there were “significant risk management gaps.”

Liquidity
The Kansas City Fed concluded that “liquidity risk was relatively low” at Custodia. 
This makes sense because, unlike banks that use a "fractional reserve" business model to lend out deposits, Custodia uses a "fully reserved" model--meaning it retains liquid reserves covering over 100% of the deposits it takes in.
Notwithstanding its hyper-conservative liquidity model, the Fed in DC changed the Report to say there were “insufficient liquidity risk management processes” at Custodia.

Management Experience
The Kansas City Fed concluded that the experience of Custodia's management team was “impressive” and “extensive.”   
The Fed in DC changed the Report to say there was a “lack of collective depth of relevant banking experience” at Custodia.


The Report, “revised” by the Fed in DC to say the opposite of what the Kansas City Fed had concluded, was used as the basis for denying Custodia's application for a master account.

It is obvious from the documents uncovered in discovery that the process was rigged because the Fed objected to Custodia’s plan to provide banking and digital asset services to individuals and businesses involved in crypto.

Fighting the Fed is the quintessential David v. Goliath battle.

Fortunately, Caitlyn Long, the CEO of Custodia, is a fighter. 
But Caitlin is not just fighting for Custodia, she is fighting for all of crypto and the principle of financial freedom.

https://twitter.com/MetaLawMan/status/1752722655881441651

[Peter90]

How does the forum deal with fake news?

Hello ignorant ******s
I hope you are following this thread and learning something

Don Pedro Dinero

famososMuertos

Zed0X

MrSpasybo

bitterguy28

admin

bitmover

hugeblack

[bitmover]

How does the forum deal with fake news?

I don't get why I was quoted?

Do you have reference links to that bank situation in USA? Like big jornal?

[Peter90]

This woman is fighting vs the US gov in order to offer US crypto fintech banking services
The whole crypto community around the world should revere here

She's a hero

[Peter90]

Caitling Long - CEO of Custodia Bank - talking about Operation CP2

US gov debanking not only crypto but all fintech











How does the forum deal with fake news?

Don Pedro Dinero

famososMuertos

Zed0X

MrSpasybo

bitterguy28

bitmover

hugeblack


Hello trolls
instead of group-defecating on other users
start reading around and inform yourselves

[Peter90]

The feds are trying to stifle Bitcoin and crypto with draconian new regulations


In response to the Treasury Department’s requests, a new bill called the ENFORCE Act is being floated to expand existing money laundering rules into the crypto sector even more harshly than it is applied to traditional fiat currencies.

It would also require filing Suspicious Activity Reports with the Financial Crimes Enforcement Network for any “suspicious transaction that it believes is relevant to the possible violation of any law or regulation,” beginning at $2,000.
This overly broad definition extends to any crypto transactions that “serve no business or apparent lawful purpose” as determined by any crypto exchange, and they would be legally required to withhold information of this report from the customer.

While this bill is much less harsh than similar proposals from anti-crypto firebrand Sen. Elizabeth Warren, it would provide stricter rules and procedures for crypto companies than the traditional banking sector.
For the average American consumer and user of cryptocurrencies on custodial services, that means there would be more scrutiny and surveillance at a smaller threshold on Coinbase than Bank of America.

Rather than embracing the permissionless innovation that Bitcoin and its cryptocurrency offspring provide, these rules would force yet more financial surveillance and regulatory compliance on the next iteration of digital money, artificially choking the growth of this industry.

It would also cause even more Americans to be caught up in the dragnet of “de-banking” for crypto, as institutions would rather cut off customers’ access to their services rather than comply with the unreasonable requirement of Suspicious Activity Reports for transactions above a small threshold, as we already see in the traditional banking system.

Because these reports have no inherent justification or process many bank customers have had their accounts closed or suspended without due process. Many are likely to be minorities, the underbanked, and politically active or religious groups.


theblaze.com





How does the forum deal with fake news?

Don Pedro Dinero

famososMuertos

Zed0X

MrSpasybo

bitterguy28

admin

bitmover

hugeblack

Hello ignorants
I know it's boring reading articles
next time inform yourself before group-defecating on other users

[Peter90]

Cryptos Dump After Robinhood Reveals SEC Wells Notice Related To Its Crypto Listings

"The so-called Wells notice - which gives a company time to rebut the agency’s allegations and doesn’t necessarily indicate an enforcement action will follow - from the SEC concerns Robinhood Crypto and its cryptocurrency listings, custody of cryptocurrencies and platform operations.

Of course, anyone with a room-temperature IQ would have been able to anticipate this turn, which comes about a year after the SEC served Coinbase with an identical Wells Notice, and which comes just days before the SEC has to rule on whether to greenlight an Ethereum ETF, something which Liz Warren's pocket fascist enforcer, Gary Gensler, has sworn he will not allow simply because it goes against the interests of Warren's biggest backers.

zerohedge.com

[pmbug]

... Do you have reference links to that bank situation in USA? Like big jornal?

Jan 27, 2023 (Fortune Magazine via Yahoo! News):
https*//finance.yahoo.com/news/custodia-crypto-bank-wyoming-denied-223741850.html

More recent news (March 30, 2024):
https*//coingape.com/us-senator-lummis-opposes-court-verdict-in-custodia-vs-fed-case/

Today:
https*//www.americanbanker.com/podcast/custodia-ceo-caitlin-long-on-master-accounts-her-fight-with-the-fed

Sorry - I'm not allowed to post live links

[Peter90]

PMbug
in the House

Hello everybody
PMbug is the Admin of this gold forum
https://www.pmbug.com/forums/


I quoted him in this thread as he lives in the USA, so he should know better than us what's going on over there

Do you fear an "Operation Choke Point 2.0" in your country?

[pmbug]

...
... he lives in the USA, so he should know better than us what's going on over there ...

Thanks Peter.  It's really frustrating to watch what's happening with America's war on crypto (of which, Operation Choke Point 2.0 is just a part/prong). 

NSIAP, but worth reading (37 page .PDF from March 2023 courtesy of Cooper & Kirk, a law firm that sued FDIC, OCC & Fed over OCP1.0):

Cooper & Kirk

Operation Choke Point 2.0: The Federal Bank Regulators Come For Crypto
...
Executive Summary

Recent stories in the financial press have uncovered a coordinated campaign by prudential bank regulators to drive crypto businesses out of the financial system. Bank regulators have published informal guidance documents that single out cryptocurrency and cryptocurrency customers as a risk to the banking system. Businesses in the cryptocurrency marketplace are losing their bank accounts, or their access to the ACH network, suddenly, and with no explanation from their bankers. The owners and employees of cryptocurrency firms are even having their personal accounts closed without explanation. And over the past two weeks, federal regulators have shut down a solvent bank that was known to be serving the crypto industry and, although it is required to resolve banks through the “least cost resolution” to the Deposit Insurance Fund, the FDIC chose to shutter rather than sell the part of the bank that serves digital asset customers, costing the Fund billions of dollars.

This pattern of events is not random, and we have seen it before. This is not the first time that federal bank regulators, working with their State-level counterparts, have abused their supervisory authority to label businesses unworthy of having a bank account and worked in secret to purge disfavored lines of commerce from the financial system. Beginning in 2012, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System carried out a coordinated campaign to weaponize the banks against industries that had fallen out of favor with the administration—including gun stores, pawn shops, tobacco stores, payday lenders, and a host of other brick and mortar businesses. That campaign was called Operation Choke Point.

Our firm successfully challenged Operation Choke Point, and it was brought to a halt. The current bout of regulatory overreach against the crypto industry is illegal for much the same as reason as its predecessor. Specifically:

• Operation Choke Point 2.0 deprives business of their constitutional rights to due process in violation of the Fifth Amendment. It is well settled that when a federal agency attaches a derogatory label to an individual or business, and this stigmatizing label causes the business to lose a bank account or broadly precludes them from the pursuit of their chosen trade, the agency has violated the Due Process Clause of the Fifth Amendment, unless if first afforded the individual or business a right to be heard. This is precisely what the federal bank regulators responsible for Operation Choke Point 2.0 have done and continue to do by labeling crypto businesses a threat to the financial system, a source of fraud and misinformation, and a risk to bank liquidity.

• Operation Choke Point 2.0 violates both the non-delegation doctrine and the anticommandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.

• By leveraging their authority over the banks to acquire the power to pick and choose the customers whom the banks may serve, the bank regulators have exceeded their statutory authority. The bank regulators are charged with supervising the safety and soundness of the banks; their effort to anoint themselves the gatekeepers of the financial system and the ultimate arbiters of American innovation and American economic life cannot be permitted to stand.

• The federal bank regulators are also refusing to perform their non-discretionary duties when doing so will benefit the cryptocurrency industry. State banks that are statutorily entitled to access the federal reserve system are being denied their rights solely because they serve the crypto industry. The federal bank regulators are not free to pick and choose which statutory obligations they duties they wish to perform.

• The federal bank regulators are evading the notice and comment rulemaking requirements of the administrative procedure act by imposing binding requirements on the banking industry through informal guidance documents. This is undemocratic, since it deprives the public of the right to comment on proposed rules, and it also runs contrary to the principle of judicial review, since courts lack the power to review “informal” agency actions.

• Finally, the federal bank regulators are acting in an arbitrary and capricious fashion by failing to adequately explain their decisions, by failing to engage in reasoned decisionmaking, and by failing to treat like cases alike. It is difficult to imagine a more arbitrary and capricious agency action than simultaneously placing a solvent bank into receivership solely because it provided financial services to the crypto industry, while permitting insolvent institutions not tied to the crypto industry to continue operating.

We therefore urge Congress to perform its oversight role and hold these agencies to account. In section IV of this paper, we propose a series of questions that need to be answered— and a series steps that Congress should take in an effort to obtain those answers.

• First, Congress should require the bank regulators to produce their communications with supervised financial institutions and state regulatory agencies regarding the denial or regulation of access to the financial system by crypto businesses and banks that serve the crypto industry.

• Second, Congress should require the federal bank regulatory agencies to explain the basis for their conclusion that the safety and soundness of the financial system require the insulation of the banks from blockchain technology, from customers who operate in the crypto space, and from state-chartered depository institutions that are currently serving those customers.

• Third, Congress should make clear to the federal bank regulators, and all federal agencies, that the notice and comment rulemaking requirements of the Administrative Procedure Act are not optional. The requirements imposed by the APA are not obstacles to be evaded by the use of informal guidance documents.

• Fourth, Congress should investigate the role of federal regulators in the decision by the New York Department of Financial Supervision’s decision to shutter Signature Bank. Congress should also determine the FDIC’s role in excluding bidders who wished to acquire Signature’s digital asset businesses from the bidding process.

• Fifth, Congress should investigate whether bank regulators are acting to squelch private sector innovation in order to clear the field of competition for the benefit of existing federally regulated banks or for a federal cryptocurrency alternative. The persistent unwillingness of the nation’s bank regulators to follow the law and obey the Constitution calls out for Congressional action. Cracks are starting to form in the American financial system as its regulators increasingly abuse their power to achieve aims outside their authority and beyond their competence.
...

More:

https*//www.cooperkirk.com/wp-content/uploads/2023/03/Operation-Choke-Point-2.0.pdf

[NotATether]

NSIAP, but worth reading (37 page .PDF from March 2023 courtesy of Cooper & Kirk, a law firm that sued FDIC, OCC & Fed over OCP1.0):

...
This pattern of events is not random, and we have seen it before. This is not the first time that federal bank regulators, working with their State-level counterparts, have abused their supervisory authority to label businesses unworthy of having a bank account and worked in secret to purge disfavored lines of commerce from the financial system. Beginning in 2012, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System carried out a coordinated campaign to weaponize the banks against industries that had fallen out of favor with the administration—including gun stores, pawn shops, tobacco stores, payday lenders, and a host of other brick and mortar businesses. That campaign was called Operation Choke Point.

Our firm successfully challenged Operation Choke Point, and it was brought to a halt. The current bout of regulatory overreach against the crypto industry is illegal for much the same as reason as its predecessor.

I have skimmed through the document and I was surprised to see that this law firm has experience with halting this kind of nonsense operation before.

Specifically though, the fifth point is the most decisive, I think. If prosecutors can prove that the regulators are hamstringing US crypto businesses so that Wall Street can have a competitive edge, the rest of the proceeding should be straightforward.

Wall Street banks have not been having a good time lately with Treasuries, I heard, so I guess they are raiding the sofa for more cash (and enterprises).

[pmbug]

...
Specifically though, the fifth point is the most decisive, I think. If prosecutors ...

There is a contingent within the US government that is actively supporting and prosecuting a war on crypto.  The executive branch is the worst offender with the Biden administration being completely hostile and directing Gensler and the SEC as their pitbull.  The legislative branch warriors are mostly Democrats aligned with Elizabeth Warren.  The judicial branch seems to be the only holdout - with many court rulings going against the SEC.

The Department of Justice (DoJ) is part of the executive branch.  They get their marching orders from the Biden administration.  Any court cases that help to mitigate the malfeasance will require significant effort from private actors.  The DoJ isn't going to help.

[Aanuoluwatofunmi]

1) Do you think similar policies will expand to other countries - or continents - outside of the USA?

When it comes to government regulations, we may not be able to predict what they can come up with at anytime, but as regards this one, it may not applies to other countries, my fear is the way they remain being unpredictable once its comes to affairs on regulations on cryptocurrencies, anything is bound to change at anytime, just be in custody of your assets in cryptocurrencies.