Investigating Allegations of Debanking: Blockchain Association’s Request for Information

04/17/2023 12:34 • Metaverse Matters • 121 views

According to reports, the Blockchain Association has made a further request under the Freedom of Information Act (FOIA) to investigate allegations of de banking that may have improperly led to the bankruptcy of Signature, Silicon Valley, and Silvergate. The association stated in a statement that it has submitted information requests to the Federal Housing Finance Agency (FHFA) and the New York Department of Financial Services (NYDFS).

The Blockchain Association has requested an investigation into encrypted and friendly bank information

Introduction

The Blockchain Association, a trade association representing the blockchain industry, has recently made a request under the Freedom of Information Act (FOIA) to investigate allegations of debanking that may have led to the bankruptcy of Signature, Silicon Valley, and Silvergate. In its statement, the association stated that it has submitted information requests to the Federal Housing Finance Agency (FHFA) and the New York Department of Financial Services (NYDFS). This article delves into what debanking is and what led to the Blockchain Association’s request for information.

What is Debanking?

Debanking, also known as defunding, is the practice of banks’ cutting off financial services to businesses or individuals that they deem risky. This action can leave people and businesses without legal access to banking and financial services, which can lead to bankruptcy and closure of their operations. In recent years, debanking has become a growing problem in the blockchain industry, with many crypto firms facing debanking for not adhering to mainstream banking’s Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.

Allegations of Debanking: Signature, Silicon Valley, and Silvergate

The Blockchain Association’s request for information about the debanking of Signature, Silicon Valley, and Silvergate is noteworthy for several reasons: First, these three entities are some of the biggest players in the cryptocurrency space, with millions of dollars in yearly revenue. Second, they all faced debanking, which resulted in bankruptcy and ultimately led to their closure. Third, the Blockchain Association believes that the debanking was done improperly, leading to these closures.
Signature, a bank catering specifically to the cryptocurrency industry, was one such company that faced debanking. It ultimately filed for bankruptcy and was sold at auction for a fraction of its value. Silicon Valley Bank (SVB), which provided banking services to many of the most successful cryptocurrency exchanges, also stopped providing banking services to them, which led to their closure.
Silvergate Bank is another company that was affected by debanking. It was the target of a campaign by unknown actors that made it difficult for the bank to operate normally, causing it to seek help from regulators.

Blockchain Association’s Request for Information

The Blockchain Association’s request for information centering around these three companies is aimed at getting to the bottom of the allegations of debanking. The Association wants to know whether the debanking was done properly or whether there was any wrongdoing or violation of the law.
The Association has submitted its requests to the FHFA and the NYDFS. The FHFA, a federal agency overseeing the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), which are two major institutions that finance mortgages in the United States, has regulatory authority over banks and lending institutions. Meanwhile, the NYDFS is responsible for overseeing banks, insurance companies, and other financial services providers in New York State.

Conclusion

Debanking has become a significant problem in the cryptocurrency industry, impacting businesses’ ability to operate and forcing them to close. The Blockchain Association has taken the lead in fighting this growing problem by seeking information about allegations of debanking that led to the bankruptcy of Signature, Silicon Valley, and Silvergate. Through its request for information, the Association hopes to learn more about the circumstances that led to the debanking allegations and whether there was any wrongdoing or violation of the law.

FAQs

1. What is debanking?
Debanking, also known as defunding, is the practice of banks cutting off financial services to certain businesses or individuals that they deem risky.
2. What are the risks of debanking?
Debanking can leave businesses and individuals without access to legal banking and financial services, leading to bankruptcy and closure of their operations.
3. How is the Blockchain Association fighting against debanking?
The Blockchain Association has taken the lead in fighting debanking by submitting requests for information about allegations of debanking to relevant regulatory bodies such as the Federal Housing Finance Agency (FHFA) and the New York Department of Financial Services (NYDFS).

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