The U.S. Senate and House of Representatives are investigating allegations that financial regulators under former President Joe Biden abused their power to cut off cryptocurrency companies from banking services, a congressional statement said on Jan. 24.
The alleged scheme, dubbed “Operation Choke Point 2.0” in the crypto community, could have serious consequences for regulators.
Senator Tim Scott, the chairman of the Senate Banking Committee, said a hearing on cryptocurrency debanking has now been scheduled for Feb. 5, criticizing the move as “un-American.” He said:
“Under Operation Choke Point 2.0, Biden’s regulators abused their power to force financial institutions to cut off services to digital asset companies, political figures, and conservative businesses and individuals. That is unacceptable. As the chair of the Senate Banking Committee, I look forward to working with President Trump, industry leaders, and members of both parties to end these abuses.”
On January 16, Senator Cynthia Lummis sent a letter to FDIC Chairman Marty Gruenberg demanding the immediate preservation of all digital asset-related documents from January 2022.
“These actions are illegal and unacceptable,” she wrote. Lummis’ letter said that FDIC employees are under close surveillance to prevent any leaks to the Senate. She also claimed that employees face legal threats for speaking out, a decision that “could result in criminal charges being brought to the Justice Department.” Senator Lummis ordered the release of preserved documents on how the FDIC monitored banks like Silvergate and Signature, two key crypto-friendly banks that failed in 2023.
She also called for interagency coordination on digital assets and enforcement actions against banks that do business with cryptocurrency companies.
“You must immediately cease and desist from destroying the material,” Senator Lummis insisted. She emphasized that classifying the records as “sensitive” would not protect 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 targets cryptocurrency.
Donald Trump has vowed to end Operation Chokepoint 2.0 during his presidency. He called the alleged crackdown “a coordinated attack on innovation. The industry is being unfairly targeted. We will put an end to it.”
According to Fox Business’ Eleanor Terrett, the companies invited include Coinbase, Kraken, Uniswap, Lightspark, and a16z.
Meanwhile, the FDIC has found itself at the center of a scandal after whistleblowers accused the agency of destroying evidence related to its oversight of cryptocurrencies.
However, Biden administration officials have denied any wrongdoing. In June last year, former White House press secretary Karine Jean-Pierre said that all of Biden’s regulatory actions were “aimed only at stopping fraud and ensuring financial stability,” and not at cryptocurrency.
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