Potential crypto ban: Coin Center raises the alarm on the RESTRICT Act Samuel Wan · 5 hours ago · 2 min read Coin Center warns of the potential for US authorities to block, restrict, and ban entire asset classes — including cryptocurrency.2 min read Updated: March 29, 2023 at 10:31 am Cover art/illustration via CryptoSlate Ad Coin Center posted a scathing assessment of the RESTRICT Act – saying the bill proposal could be used to ban crypto.The cryptocurrency advocacy organization highlighted several problems with the bill, including its potential to block and restrict access to open protocols, such as the Bitcoin (BTC) network.Moreover, Coin Center drew parallels with the existing Office of Foreign Assets Control (OFAC) system.But, crucially, they pointed out the RESTRICT Act differs by curtailing recourse — infringing on First Amendment rights.“The Act creates a redundant regime paralleling OFAC without clear justification, it significantly limits the ability for injured parties to challenge actions raising due process concerns, and unlike OFAC it lacks any carve-out for protected speech.” In August 2022, the OFAC sanctioned cryptocurrency mixer Tornado Cash over allegations of laundering $7 billion in digital assets.The crypto community generally saw the move as another instance of governmental overreach and an attack on privacy.At the time, Coin Center questioned the legitimacy of sanctioning an inanimate tool “that can be put to good or bad uses like any other technology.” The RESTRICT Act The RESTRICT Act was introduced to the U.S.
Senate on March 7 and sought to ban technologies tied to foreign governments.Although not mentioned in the bill specifically, it is widely considered a response to prohibiting the short-form video platform TikTok.According to the proposals, the Commerce Department at the White House would conduct a review of foreign technologies.Subsequently, the Department would have the authority to respond as necessary — which may include banning the technology if deemed appropriate.
Senator Warner — who sponsored the bill — said the proposals do not target TikTok specifically.However, he added that, on average, 100 million Americans use the platform for 90 minutes daily.
Moreover, it’s what “everybody is talking about.” Coin Center warns of blanket authority Coin Center said it does not object to sanctioning “actual foreign adversaries,” such as transactions involving North Korean ransomware incidents.However, it raised concerns that the powers granted under the Act could be utilized even if there is no foreign adversary.
Similarly, the organization further objected to the potential scope, in misinterpreting wording, to enact the banning of entire asset classes, such as all Bitcoin transactions.“If such an unreasonable and overbroad interpretation of the RESTRICT Act was made, we’d be fighting it in court.” Former Coinbase CTO Balaji Srinivasan repeated previous concerns, saying the Act “is the American Great Firewall.” Srinivasan added that the U.S.
is becoming “China in the name of beating China.” The comment was made in reference to a post stating VPN access to banned apps could land the perpetrator 20 years in prison and a $250,000 fine.Access to crypto Law Firm’s White Paper Claims US Bank Regulators Are Waging A ‘Clandestine Financial War’ Against Crypto Businesses According to a recent white paper published by four members of the law firm Cooper & Kirk, PLLC, U.S.
bank regulators are attempting to “drive crypto businesses out of the financial system.” The paper, titled “Operation Chokepoint 2.0,” claims that after laying the groundwork by labeling lawful businesses as “reputationally risky,” federal bank regulators, with the help of state officials, “turned to the task of purging their accounts from each of the banks subject to their supervision.” Constitutional Issues Raised by Operation Chokepoint 2.0: Depriving Businesses of Due Process and Key Structural Constitutional Protections Five days ago, Bitcoin.com News published an article that examines recent discussions in the crypto community regarding “Operation Chokepoint” and why crypto proponents believe the U.S.government aims to eliminate access to cryptocurrencies.On Monday, the Washington D.C.law firm Cooper & Kirk published a white paper on the subject, noting that U.S.
bank regulators are ostensibly waging a “clandestine financial war” against the crypto industry.The paper’s authors, David Thompson, John Ohlendorf, Harold Reeves, and Joseph Masterman, begin by explaining “Operation Chokepoint 1.0” before delving into “Operation Chokepoint 2.0.” The first iteration of the alleged operation began by labeling legal and law-abiding crypto entities as “reputationally risky.” The second stage of the operation attempts to choke the crypto industry by restricting access to on and off-ramps.According to the Cooper & Kirk paper, “in the back rooms of banks around the country, bank examiners explained that those financial institutions that continued to serve customers that the federal regulators had labeled ‘reputationally risky’ would suffer the consequences.” The law firm explains that one of the first acts committed was when the Biden administration’s Office of the Comptroller of the Currency (OCC) rescinded a rule designed to “ensure fair access to banking services for several industries—including debt collection—previously cut off during the controversial Obama-era program Operation Chokepoint.” The Cooper & Kirk authors further detail that the Federal Deposit Insurance Corporation (FDIC) got involved on April 7, 2022.At that time, the FDIC issued a letter to all institutions under its supervision, asking for information concerning their interest in serving the crypto industry and banks that are already engaged with businesses of this nature.Cooper & Kirk’s white paper asserts that Operation Chokepoint 2.0 is unlawful and unconstitutional.“Operation Choke Point 2.0 deprives businesses of their constitutional rights to due process in violation of the Fifth Amendment,” the paper’s authors explain.
“Operation Choke Point 2.0 violates both the non-delegation doctrine and the anti-commandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.” The white paper follows the failures of three major U.S.banks that had connections with the crypto industry, as well as commentary from Signature Bank board member and former politician Barney Frank, who suggested that Signature’s seizure was meant to be an “anti-crypto” message.Tags in this story Access to crypto, accounts, anti-commandeering doctrine, bank examiners, Banking, Barney Frank, Biden Administration, Bitcoin, Compliance, constitutional protections, Cooper & Kirk, crypto industry, Crypto Proponents, Cryptocurrency, Customers, Due Process, Enforcement, entities, FDIC, federal regulators, Finance, financial system, financial war, Government, industry, institutions, Law, law-abiding, lawful, legal, non-delegation doctrine, OCC, off-ramps, on-ramps, operation chokepoint, purging, Regulation, Reputation, risk, Signature Bank, state officials, supervision, US banks, White Paper What do you think about the allegations made in the Cooper & Kirk white paper? Do you believe that Operation Chokepoint 2.0 is unconstitutional, and if so, what actions should be taken to protect the rights of crypto businesses? Share your thoughts in the comments section below.Jamie Redman Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida.Redman has been an active member of the cryptocurrency community since 2011.He has a passion for Bitcoin, open-source code, and decentralized applications.
Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.Image Credits: Shutterstock, Pixabay, Wiki Commons Disclaimer: This article is for informational purposes only.It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies.Bitcoin.com does not provide investment, tax, legal, or accounting advice.Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.Law firm Cooper & Kirk accuses US regulators of weaponizing banking Samuel Wan · 46 mins ago · 2 min read Cooper & Kirk calls on Congress to investigate unlawful and unconstitutional actions against the crypto industry.
2 min read Updated: March 28, 2023 at 5:13 pm Cover art/illustration via CryptoSlate Ad Cooper & Kirk published a paper titled “Operation Choke Point 2.0: The Federal Bank Regulators Come For Crypto,” where the Washington D.C.-based law firm dives deep into the unlawful, unconstitutional, and arbitrary “backroom war on crypto” led by U.S.regulatory authorities.Crypto under fire A February tweet from Castle Island Ventures Partner Nic Carter first tipped off the community of a coordinated attack on the crypto industry.“It is a well-coordinated effort to marginalize the industry and cut off its connectivity to the banking system – and it’s working.” At the time, Carter’s message was met with a degree of ambivalence.However, several regulatory enforcement actions have followed since then — including Coinbase being served with an SEC Wells Notice and — most recently — the CFTC suing Binance over commodities violations.Former Coinbase CTO Balaji Srinivasan said Cooper & Kirk’s paper is strong evidence that Carter was right all along.
However, he believes the intended consequences of the attack will be repelled.
“Hard to deny now that there is a coordinated assault on Bitcoin.But freedom will push back, at national and state level.“ The public first became aware of Operation Choke Point in August 2013.It referred to a program that used the banking system to implement political views without going through the appropriate due process.Authorities targeted various “undesirable” industries through their banking providers, including ammunition, coin dealers, and home-based charities.Cooper & Kirk said history is repeating itself — with crypto deemed the undesirable industry this time around.The law firm successfully sued the FDIC, Fed, and OCC for their part in the original Operation Choke Point — with a settlement reached in May 2019.History repeats with Operation Choke Point 2.0 In summarizing the situation, Cooper & Kirk said there is a coordinated campaign by banking regulators to cut crypto out of the financial system.
This has taken the form of informal top-down guidance documents that target crypto-related entities, including firms, customers, and crypto employees and owners — in effect, de-banking those groups.“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.” Cooper & Kirk labeled these actions an abuse of authority and the weaponization of the banking system.Moreover, such actions breach constitutional rights and violate due process — a specific mention was given to the seizure of Signature Bank, which occurred on March 12.Signature Bank was closed by the New York State Department of Financial Services (NYDFS) to prevent contagion from spreading.
Board member Barney Frank said the bank was sufficiently capitalized, and the seizure was about sending a “strong anti-crypto message.” What now? The law firm called on Congress to intervene and hold these regulatory agencies to account.They recommended six steps to achieve this.Those are: – Regulators to show communications regarding the denial or regulation of banking access to crypto entities.- Relevant agencies to explain their reasoning for cutting off crypto entities from the banking system.
– Remind regulators and federal agencies that the Administrative Procedure Act — which requires proposed rulemaking to follow due process, such as public comment — is not optional.- Investigate the closure of Signature Bank — including the FDIC directive to exclude the firm’s digital asset business from the bidding process.- Investigate whether regulators are deliberately suppressing “private sector innovation.” Binance execs used Signal, discussed Hamas funds, told customers how to use VPNs: CFTC filing Mike Dalton · 8 hours ago · 2 min read The CFTC alleged that Binance executives have engaged in wrongdoing.2 min read Updated: March 28, 2023 at 3:42 am Cover art/illustration via CryptoSlate Ad Binance faces various allegations from the U.S.Commodities and Futures Trade Commission (CFTC) that point toward wrongdoing among company executives.Binance used Signal’s auto-delete feature On March 27, the CFTC filed charges against the leading crypto exchange Binance.
Though its charges primarily suggest that Binance went against regulations to serve U.S.-based customers, those allegations also describe other improper actions.Notably, the CFTC highlighted the fact that Binance executives used the messaging application Signal to communicate.It added that the application’s auto-delete feature allowed executives to delete records of discussions of incriminating activity.The regulator alleged that Binance used Signal to communicate internally and with customers alike.Specifically, the CFTC said that discussions around U.S.restrictions were conducted over Signal — a practice that was “mandated” by Binance CEO Changpeng Zhao, according to former Binance compliance officer Samuel Lim.Compliance officer knew about illegal use The CFTC also highlighted Binance’s ties to illegal activity.
Specifically, the CFTC said that Binance received information about transactions linked to the Islamic terrorist group Hamas around February 2019.Soon after that, Lim acknowledged the fact by stating in a message that terrorist groups often send “small sums” because larger amounts are considered to be money laundering.In 2020, Lim commented on funds from Russian and other users, stating: “come on … they are here for crime.” Another executive said: “we see the bad, but we close [two] eyes.” Lim furthermore allowed a customer whose transactions were linked to illegal activity to continue using Binance with a new account.
Elsewhere, Lim discouraged the closure of high-risk accounts, stating “Offboarding=bad in [Changpeng Zhao]’s eyes.” Binance told users how to use VPNs Another section of the CFTC’s filing suggests that Binance told customers how to bypass its geofencing measures by using a virtual private network (VPN).Binance stopped serving customers in the United States in 2019 but posted a VPN guide soon after that.Though the guide has been deleted, the CFTC said that one section of the page informed users that VPNs can be used to “unlock sites that are restricted.” The advice was seemingly deliberate: in conversation logs, Lim said that Changpeng Zhao wanted users to know how to use a VPN to access Binance.He also suggested that third parties can tell users to access VPNs, even though Binance itself could not do so.
Lim recognized in yet another conversation that changing a U.S.users’ status to non-U.S.is fraud, but said that Binance can encourage users to use a non-KYC account or VPN.Binance countered these assertions in a statement today, stating that it blocks U.S.customers based on their cellphone service provider, credit card location, and KYC data — not just their IP address, which is the only block that a VPN would circumvent.Binance has additionally addressed employee trading on its own platform but otherwise has not yet addressed most of the CFTC’s concerns.
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