Senator Cynthia Lummis says the FDIC is trying to hide Chokepoint 2.0 cryptocurrency operation
The Federal Deposit Insurance Corporation (FDIC) is under fire after Senator Cynthia Lummis accused the agency of trying to bury evidence of its involvement in what the cryptocurrency community has dubbed “Operation Chokepoint 2.0.”
In sting letter Directed at FDIC Chairman Marty Gruenberg, Loomis exposed whistleblower allegations alleging that the agency was destroying documents related to its digital asset activities while threatening employees to remain silent.
“These actions are illegal and unacceptable,” Loomis wrote, demanding the immediate preservation of all documents, communications and metadata related to digital assets since January 2022.
Gruenberg warned that any obstruction of Senate oversight would result in a criminal referral to the Department of Justice. The letter details allegations that staff were closely monitored to prevent leaking to the Senate, where some staffers reportedly face legal threats for speaking out.
Whistleblowers, banks and crypto holders
The whistleblower allegations add a new layer to the FDIC’s iron-fisted approach to cryptocurrencies. Loomis claimed that documents relating to several key events – such as the liquidation of Silvergate Bank and the supervision of Signature Bank – were at risk of being destroyed.
“You must cease and desist the destruction of the materials immediately,” she demanded, adding that any classification of these records as “confidential” would not protect them from the Senate’s oversight powers.
The letter identified eight categories of information that the FDIC must maintain. These include supervisory records of banks serving cryptocurrency companies, communications between agencies about digital assets, and enforcement actions.
Loomis also requested that materials containing specific terms such as “crypto,” “bitcoin,” “ethereum,” and “digital assets” be preserved. The wide-ranging request underscores her frustration with what she described as evasive and obstructive behavior by federal regulators.
Silvergate and Signature, which have provided services to major cryptocurrency companies, have been at the center of speculation about regulatory pressures. Critics argue that its collapses were not a fluke, but rather the result of a concerted effort to stifle the cryptocurrency industry’s access to traditional banking services.
Origin of Operation Chokepoint 2.0
Operation Chokepoint 2.0 is a term that has gained traction among cryptocurrency enthusiasts. Many believe it is a reboot of an Obama-era initiative aimed at cutting off banking services to industries deemed “high risk.”
While the original program targeted payday lenders and firearms dealers, its sequel set its sights on cryptocurrencies. Loomis’ accusations lend weight to the theory. The FDIC’s actions are described as part of a broader effort by regulators, including the Securities and Exchange Commission (SEC) and OCC, to insulate cryptocurrency companies from the financial system.
Critics say these agencies create a chilling effect, where banks are too afraid to work with cryptocurrency clients for fear of regulatory backlash. The timing of these allegations is clear.
In the wake of high-profile bank failures and increased scrutiny of digital assets, the cryptocurrency industry has been grappling with what many consider a hostile regulatory environment. The collapse of Silvergate and Signature has been particularly damaging, not only to the companies themselves but also to the broader perception of cryptocurrencies’ place in the financial system.
President Donald Trump, a staunch supporter of cryptocurrencies, has vowed to dismantle Chokepoint 2.0 when he returns to office. “The cryptocurrency industry is being unfairly targeted,” he said, calling for an end to what he described as a “coordinated attack on innovation.”
Meanwhile, the Biden administration has denied the existence of any such operation. Officials claim that their actions are focused on combating fraud and ensuring financial stability, and do not specifically target cryptocurrencies. But to many in the industry, that denial rings hollow.
For Loomis and her allies, the stakes couldn’t be higher. It warned that any attempts to destroy evidence or obstruct oversight would be met with swift action. “If you or your staff are found to have intentionally destroyed materials or sought to obstruct the Senate’s oversight functions, I will make expedited criminal referrals to the US Department of Justice,” she wrote.
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