What Is Operation Choke Point 2.0 And Why Is Crypto Fuming Over It?

Every industry has an open secret, and in the case of cryptocurrency, there has been a long-standing discussion over Operation Choke Point 2.0 (OCP 2.0), the alleged joint efforts by some government agencies and banks to trifle the crypto industry's growth.

This week, talks about the alleged operation were revived after prominent American engineer and crypto investor Marc Andreessen talked about the matter during a Wednesday appearance at Joe Rogan's podcast The Joe Rogan Experience.

Operation Chokepoint 2.0 as per Andreessen

During his talk with Rogan, Andreessen first discussed what the first version of the alleged operation: Operation Choke Point, which he said was initiated by former President Barack Obama's government.

The original operation was focused on the "de-banking" of legal marijuana businesses, escort services, and gun shops, Andreessen said. De-banking is the banking industry's move of shutting down individual or organization bank accounts that they deem pose risks in reputational, regulatory, legal, or financial facets.

Andreessen, a well-known crypto advocate, went on to reveal that with OCP 2.0, outgoing President Joe Biden's administration "extended" the initial operation's focus toward "tech founders, to crypto founders, and then just generally political opponents."

He added that in the last four years, around 30 founders in tech and crypto have been de-banked. "This is one of the reasons why we ended up supporting [Donald] Trump," he said.

The biggest revelation was that "none of this was due process, none of this was written down," there were no rules provided to the de-banked industry leaders, and there were allegedly no legal processes involved in the de-banking with Operation Choke Point 2.0.

GOP Sen. Bill Hagerty previously described OCP 2.0 as "the coordinated effort by the Biden administration's financial regulators to suffocate our domestic crypto economy by de-banking the industry and severing entrepreneurs from the capital necessary to invest here in America."

Crypto Leaders Reveal Their Experiences

After the episode aired and clips of Andreessen's discussion about the operation spread like wildfire on X, crypto leaders who said they were de-banked under the operation shared their stories.

• Frax Finance

Sam Kazemian, the founder of DeFi economy Frax Finance, revealed that he has maintained silence "for almost a year out of fear" but has now found the courage to share his experience since he is in "good company" now with other crypto and tech leaders.

Kazemian said "JPM" reached out to him last December that the bank had to "close anyone's account that we know their primary source of income/wealth is crypto."

When asked for context on where his fear was coming from in his months of silence, Kazemian said he was afraid he would lose access to the other banks and payment processor accounts he still had, and didn't want attention "during the most intense months of OCP 2."

• Gemini Exchange

Tyler Winklevoss, who founded the Gemini crypto exchange with his twin, Cameron, revealed that he was "debanked because I'm in crypto, as was Gemini."

Winklevoss projects that the number of de-banked crypto and tech leaders is actually higher than 30, adding that the people behind Operation Choke Point 2.0 "also assassinated several banks because they banked crypto companies."

Cameron confirmed his twin brother's claims, saying between himself, Tyler, and Gemini, "we lost more bank accounts than you can count on two hands."

• CureCoin

The team behind hybrid cryptocurrency as early as 2014, CureCoin "had bank accounts get shut down without explanation." They asked for more details regarding the account closures but allegedly were told that "we don't know why, but we do know the decision came from up high."

• Custodia Bank

Caitlin Long, the founder and CEO of Custodia Bank, revealed her company was debanked "repeatedly." Notably, Custodia Bank has pending lawsuit over its fight to have access to the U.S. Federal Reserve's services.

Prominent crypto lawyer and former Massachusetts senatorial candidate John Deaton said the case is "arguably the most important case filed when talking about un-elected bureaucrats and the deep state protecting the Banking system's status quo."

• Coinbase

Brian Armstrong, the CEO of crypto exchange titan Coinbase, said he "can confirm this is true," but did not go into details about whether it was his personal account or Coinbase accounts that were affected by OCP 2.0.

"It was one of the most unethical and un-American things that happened in the Biden administration, and my guess is we'll find Elizabeth Warren's fingerprints all over it," noting that the outgoing President may not have been aware of the operation.

Did Regulators, White House Conspire with Banks?

There have been allegations that financial regulators conspired with banks to stifle growth in the crypto space, especially after a joint statement from the U.S. central bank, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) was released early in 2023.

The statement was specifically addressed to "banking organizations," supposedly warning them of the risks related to cryptocurrencies.

A few weeks later, the White House released the Biden administration's "Roadmap to Mitigate Cryptocurrencies' Risks," saying the Biden government will act to mitigate the risks "using the authorities that the Executive Branch has."

It remains to be seen how the incoming government under Trump will address the OCP 2.0 issue and whether it will look into the allegations for accountability, if any.