Marc Andreessen and the CFPB: Debunking the Debanking Debunkers

This week, Venture Capitalist Marc Andreessen appeared on the Joe Rogan podcast and made some explosive claims about the systematic “debanking” of politically disfavored firms and individuals, specifically the crypto industry. Gofundme for sending money to Gaza, for instance. As for the mainstream left they tend to straightforwardly support the debanking of their political enemies, so they would just rather ignore the whole thing.

But there is a section of the left that is at least somewhat ideologically consistent, and is skeptical of corporate and state power over speech and finances. (A growing cohort, perhaps, now that the right has reclaimed control over a few tech platforms, and regained State power). They have been speaking out against debanking for a while. They recognize that while dissident voices on the right have been the primary victims of debanking (think Kanye, Alex Jones, Nick Fuentes and so on), this could just as easily happen to the left if the tables were turned. They more narrowly define debanking in the following way: “Debanking, or, as some financial institutions prefer, derisking, refers to a bank cutting ties with a customer deemed politically incorrect, extreme, dangerous, or otherwise out of bounds.” (from this TFP article). Rupa Subramanya in that article talks about how banks have the power to completely ruin someone’s financial life if they consider them too reputationally risky to do business with. And individuals across the political spectrum have been affected — Melania Trump, Mike Lindell, Trump himself, Christian charities, the Jan 6ers, and Muslim crowdfunding groups and charities.

Yet many on the left are nevertheless critical of or nonplussed by Andreessen’s comments, especially regarding the CFPB. Here are a few examples:

Lee Fang: The CFPB has loudly opposed debanking, why is Andreesen saying this? Where’s the evidence? Left unmentioned in this screed is the fact the CFPB has investigated Andreesen backed startups for scamming people, not political speech. Debanking comes from the FBI and DHS, not CFPB

Lee Fang: There’s a huge issue re debanking. We saw anti-Covid mandate truckers losing access to bank accounts over activism, pro-Palestinian orgs losing access to Venmo, etc. But now predatory lenders & scammers are conflating consumer protection w/ “debanking” to call for deregulation.

Jarod Facundo: I have no clue what @pmarca is referring to bc literally just a few months ago at a FedSoc event, CFPB director Chopra warned the audience of Wall Street debanking conservatives without explanation.

Jon Schweppe: I’m with @dorajfacundo. No idea what @pmarca is actually referring to here. The CFPB has been leading the charge against discriminatory debanking. What is this actually about?

Ryan Grim: The CFPB put out a legitimately good rule that went after banks over debanking users based on political views. Yes, a populist left wing CFPB head stood up for the rights of conservatives. Now VCs and Musk who don’t like the CFPB for other reasons are straight up lying to whip people into a frenzy and defang the CFPB.

Overall, this group resents crypto and fintech and does not consider firms in those industries valid debanking victims, certainly not on a moral par with the crowdfunding platform sending funds to Gaza. Crypto people, according to the left-libertarians, made their bed. Crypto folks to issue tokens, scam and commit fraud, the thinking goes, and they deserve to be treated with contempt by the banks. “If crypto founders were debanked, that’s some bank regulation business. Not our fight.”

Moreover, Marc erred, according to these critics, by casting blame at the feet of the CFPB. The CFPB, we are told, is an agency fighting debanking. Marc is simply upset at the CFPB because he invests in fintech platforms and the CFPB is in charge of making sure they don’t abuse their customers.

Since Marc appeared on Rogan, dozens of tech and crypto founders have opened up about their stories of unilateral deprivation of bank access. Many in crypto see a light at the end of the tunnel and believe that bank regulators’ unconstitutional attacks on the crypto space via banks are at an end. Cries to investigate “Operation Choke Point 2.0” have reached a fever pitch. So who is right? Andreessen or his critics? Is the CFPB really culpable? Is debanking really as big a problem as Marc maintains? Let’s investigate, starting with the CFPB.

What is the CFPB?
The Consumer Financial Protection Bureau (CFPB) is an “independent” agency established in 2011 by the Dodd Frank act in the wake of the financial crisis. It has a vast mandate, being authorized to supervise banks, credit card companies, fintechs, payday lenders, debt collectors, and student loan companies. As an independent agency, it is funded outside of Congress (and so immune to Congressional funding review). The director can not be easily removed by the President, it can make rules directly, and it can bring enforcements and legal cases under its own name. It has a considerable degree of power. The CFPB was basically set up at the exclusive behest of Senator Elizabeth Warren.

The CFPB is a frequent target of conservatives and libertarians as it is yet another federal agency, and a largely unaccountable one at that. It was set up by Elizabeth Warren, a frequent target of the right, to effectively harass fintechs and banks. And of course, most of these firms were heavily regulated already. Banks have to submit to state or Federal (OCC) oversight, as well as answering to the FDIC, the Fed, and the SEC if they are publicly traded. Credit Unions, mortgage lenders, and so on all have their own regulators. It’s not like there was a gaping lack of federal financial regulation prior to the establishment of the CFPB. The US has more financial regulators than any country on the planet. So you can forgive the right for wondering why Elizabeth Warren, who seems to operate purely on spite, was granted an entire pet agency that she could use to harass her political enemies at will.

Now in terms of what the CFPB is meant to do.

There are specific regulations in the CFPB’s mandate that generally oppose discrimination in bank access. Notably, these include the Equal Credit Opportunity Act (ECOA) and the Unfair, Deceptive, or Abusive Acts and Practices (UDAAP) portions of Dodd-Frank. The ECOA prohibits discrimination in credit transactions based on certain protected classes: race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.

As far as the broader Choke Point conversation that Marc Andreessen brought up is concerned, this doesn’t really apply. “Crypto entrepreneurs” or “Conservatives” are not a protected class under law. Thus, this portion of the CFPB’s mandate does not address, even in theory, the issue at hand: the political targeting of specific disfavored industries. Moreover, this regulation applies to credit access, rather than banking generally.

The UDAAP portions of Dodd-Frank is another regulation that could plausibly pertain to debanking. It gives the CFPB broad authority to go after practices they view as unfair, deceptive or abusive. Their monster settlement with Wells Fargo fell under UDAAP. In theory, if the CFPB were to go after debanking, they would do it under UDAAP. But they haven’t done anything just yet, aside from make noise.

What the CFPB is saying
Rohit Chopra, the director of the CFPB, specifically came out against politically-motivated deplatforming from payments platforms in a June speech at the Federalist Society. In his speech he expresses concerns around big tech payments platforms unaccountably censoring users with no recourse. He worries specifically about platforms like PayPal or Venmo shutting out users for (politically unpopular) views expressed elsewhere. This is a very real phenomenon and it’s encouraging to hear him verbalizing these issues.

There’s two issues here. The first is that Chopra seems primarily concerned with the unaccountable (undemocratic) exercise of private power, especially if these networks have monopoly-like characteristics. He doesn’t really address the risk of the state, which controls much larger payments networks through the banks, using regulatory tools to compel banks to redline whole industries (which is what Marc Andreessen is complaining about).

Second, as welcome as Chopra’s comments are, the CFBP hasn’t followed up this talk with much action. As we will explore, they are moving in the direction of potentially regulating large nonbank payment networks. However, the Choke Point 2.0 question pertains to state power over the banks wielded via financial regulators. The CFPB isn’t concerned with this. This is the ambit of the Fed, the FDIC, the OCC, and the Executive which oversees them (or Congress in the case of an investigation). The CFPB doesn’t really have the authority to regulate other financial regulators. So their ability to tackle Choke Point-style behavior is limited. (I will say though, to add a feather to Andreessen’s cap, Chopra sits on the board of the FDIC, so he’s at least partially aware of or responsible for the FDIC’s generally lawless behavior).

Notably, the CFPB did in an August court filing describe the debanking of Christians as a discriminatory practice which the agency has statutory authority to tackle. This was cited by Lee Fang as a positive (and somewhat surprising) development, as the CFPB is not known to be an agency which is particularly sympathetic to the plight of conservative groups. As I mentioned in the prior section, religious groups are a protected class, so there is little ambiguity around the CFPB’s ability in law to protest their financial exclusion. We have yet to see the CFPB stick up for a non protected class (such as conservatives generally, or an industry like crypto) that has suffered debanking, which I’ll detail in the next section. Regardless, this is a step in the right direction.

What the CFPB is doing
Most recently, the CFPB finalized a rule that would subject digital wallet and payment apps to their supervision, treating them more like banks. The rule would require large digital payments apps including Cash App, PayPal, Apple Pay, and Google Wallet to provide transparent explanations for account closures. They specifically mention “debanking” in their release on the rule. Keep in mind this rule doesn’t pertain to banks, but rather to “big tech” or p2p payments apps. Either way, no actions have been brought under this rule yet, so we have yet to see how they would implement it in the real world.

Would this rule inhibit something like OCP2.0? Almost certainly not. First of all, it covers behavior by tech companies, not banks. Second, Chokepoint-style behavior is not discretionary at the bank level, but rather the consequence of federal regulators targeting entire industries via the banks. If the CFPB noticed, for instance, that crypto startups were being systematically cut off from banking, they would have to go toe-to-toe with the FDIC, the Fed, and the OCC (and ultimately the White House) to end the practice. Given Elizabeth Warren’s staunch anti-crypto sentiment, one wonders if the CFPB would do this. And more to the point, the issue with Chokepoint has to do with bank regulators stepping outside of the boundaries of the law in order to debank an entire industry. It doesn’t have to do with malfeasance at the individual banks specifically (the banks are just haplessly carrying out the orders of their regulators).

Under UDAAP, in theory, systematic account closures targeting an industry (like crypto, for instance), could be examined by the CFPB. But this recent payment apps rulemaking, cited by some critics of Marc Andreessen to demonstrate the CFPB’s anti-debanking stance, does not apply to banks. And the CFPB in their actual enforcement actions has been silent on debanking so far.

What about the CFPB’s main enforcements?
I couldn’t find any CFPB settlements that pertained to debanking specifically. Here are their largest 30 settlements in order of size:

The closest or most adjacent cases I could find were the Citigroup 2023 case, in which they were revealed to be discriminating against Armenian Americans in the context of credit card applications. (The bank was ostensibly doing this because of heightened fraud rates in the Armenian community in California, due to fraud rings). Citigroup paid $25.9m in penalties.

In 2020, the CFPB found that Townestone Financial had discouraged African American applicants in their marketing from applying for mortgages. They paid a $105k penalty.

National origin and race are both considered protected classes under US law, so neither of these cases pertains to purely political redlining, in the same sense that critics of the crypto debanking are complaining about.

Additionally, I looked at the 50 most recent CFPB settlements dating all the way back to March 2016 and none of them covered the arbitrarily deprivation of access to banking services. Of the 50 most recent cases, 15 pertain to UDAAP violations (like the infamous Wells Fargo case), eight pertain to fair lending violations, five refer to student loan servicing, five to credit reporting inaccuracies, five to mortgage servicing, four to auto lending discrimination, three to illegal overdraft practices. Debanking: not present.

What about the substance of Marc’s critique, regarding crypto/fintech firms and conservatives getting debanked?
On this point, there is no real ambiguity. I have documented in detail the phenomenon known as Operation Choke Point 2.0, whereby the Biden administration resumed the practice of financial redlining begun in the Obama administration, which started the practice around 2013. Back then, Obama’s DoJ launched Operation Choke Point, an official DoJ program to target legal but politically disfavored industries like payday lending, cannabis, adult, and firearms manufacturers via the banking sector. This was well discussed in Iain Murray’s piece Operation Choke Point: What it is and why it matters. Obama’s FDIC, under Marty Gruenberg, used insinuations and threats to persuade banks to “derisk” firms in over a dozen industries. Conservatives cried foul, and the practice was brought to light by members of the House led by Rep Luetkemeyer. Critics felt that the practice was unconstitutional, since it involved secret regulation by persuasion, rather than official rulemaking or legislation.

In 2014, DoJ memos detailing the practice leaked, and the House Committee on Oversight and Government Reform published a critical staff memo on the practice. The FDIC issued new guidance to banks to encourage them to assess risk on a case by case basis rather than redlining entire industries. In August 2017, Trump’s DoJ officially ended the practice. In 2020, Trump’s Comptroller Brian Brooks published the “Fair Access” rule aiming to end debanking on a reputational risk basis.

However, in May 2021, Biden’s acting Comptroller Michael Hsu revoked the rule. In early 2023, following the FTX collapse, folks in the crypto industry including myself noticed that similar choke point tactics were being utilized against crypto founders and firms. In March 2023, I published Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs, following it up with another piece in May detailing new revelations. Specifically, I found that the FDIC and other financial regulators had secretly imposed a 15 percent cap on deposits at banks for crypto-related firms. Moreover, I felt that the crypto-focused banks Silvergate and Signature had been unjustly forced to liquidate or shuttered due to this anti-crypto animus in the government. Since then, crypto firms have continued to have an extremely hard time getting banking access — even though there has been no official public regulation stipulating bank restrictions on banking crypto firms, nor any legislation to that effect. Again, Choke Point 2.0 was alleged to be unconstitutional by law firm Cooper and Kirk.

More recently, with the crypto industry still suffering under the yoke of this covert regulation, I took another look at the practice, and found fresh evidence that Silvergate bank had been executed, rather than dying a natural death. Today, the 15 percent cap on crypto-focused banks remains in place, stifling the industry. Every single US-based entrepreneur has suffered from this — I can attest that every single one of our roughly 80 portfolio companies has dealt with it. My firm, Castle Island (an ordinary venture capital fund dealing only with fiat), has also suffered the abrupt closure of its bank accounts.

After Marc’s appearance on Rogan, a number of crypto executives also chimed in. David Marcus explained how the Facebook Libra project was killed off by Janet Yellen. Kraken CEO Jesse Powell, Joey Krug, Gemini CEO Cameron Winklevoss, Visa’s Terry Angelos, and Coinfund’s Jake Brukhman also shared their stories. Caitlin Long has long spoken out against Choke Point 2.0, going as far to launch her own bank, Custodia, which was deprived of a Master Account by the Federal Reserve. Critics may not be sympathetic to the crypto industry, but the fact remains that it is a perfectly legal industry, quashed by secret missives and insinuations whispered from bank regulators. The result has been a broad-based crackdown on crypto banking in the US, not done in a democratic manner through legislation or rulemaking, but entirely via the administrative state.

Outside of crypto, a similar campaign is being more quietly waged against fintechs. Since early 2023, according to research by Klaros Group, a quarter of the FDIC’s enforcement actions have been leveled at banks partnering with fintech firms (the odds for non fintech partner banks were just 1.8%). As an investor in the fintech space, I can attest that finding bank partners for fintech firms has become an almighty challenge, rivaling the difficulty that crypto firms face in getting banking. The WSJ has criticized the constitutionality of the FDIC’s campaign, stating that the agency is “engaged in de facto rulemaking while bypassing the notice and public comment period legally required under the Administrative Procedure Act.”

And regarding Andreessen’s comments on conservatives being debanked, we have ample anecdotal evidence this is happening. Melania Trump mentioned that she was debanked in her recent memoir. Gab.ai, a right-wing speech platform, suffered debanking. General Michael Flynn was debanked by JPM in 2021, citing reputational risk. BoA canceled the accounts in 2020 of Timothy Two Project International, a Christian nonprofit, and froze the accounts of the Christian preacher Lance Wallnau in 2023,In the UK, Nigel Farage was debanked from Coutts/NatWest, causing a minor scandal. These are just a few of scores of examples. Under current law, banks in the US can close accounts for any reason whatsoever, and are not required to give an explanation. So on the substance, Andreessen is correct.

Why are so many commentators trying to gatekeep “debanking”?
A common thread among the critics is that Andreessen is somehow coopting the debanking term to advance his own economic agenda. Writer Lee Fang says “There’s a huge issue re debanking. We saw anti-Covid mandate truckers losing access to bank accounts over activism, pro-Palestinian orgs losing access to Venmo, etc. But now predatory lenders & scammers are conflating consumer protection w/ “debanking” to call for deregulation.” Writers at Axios have darkly implied that Andreesen is concerned about the CFPB because his firm invests in sketchy neobanks like Synapse which collapsed earlier this year. This has been a common thread in commentary on the episode: Andreessen is only concerned about “debanking” because he wants to lighten regulation on the crypto and fintech industry and get away from the CFPB’s attempts to protect customers.

And this sounds true enough, so it’s resonating with a lot of folks on the left that don’t want to believe that the government would lawlessly deprive an entire industry of access to banking. Unfortunately for them, it’s true. The Obama administration did develop tactics to use bank regulation to unconstitutionally clamp down on industries like firearms manufacturing and payday lending. And again, the Biden administration refined these tactics and used them very effectively against the crypto space. They are now going after fintechs by harassing partner banks. These things provably happened, and in both cases they represented a vast (and unconstitutional) overstepping of administrative power, which will now be revealed and rolled back under Trump.

Whether or not writers like Fang think the Biden admin’s tactics to deprive crypto firms of access to banking takes away the moral weight of his own views on the debanking of more sympathetic groups is irrelevant. It happened, it’s debanking, and its lawless. And whether Marc Andreessen has some kind of economic motive to criticize the CFPB is also not that relevant. (I checked, and the CFPB has not brought any kind of enforcement action against an a16z portfolio company to date). The bank regulators (and Andreessen does talk about multiple agencies (plural), not just the CFPB) have indeed deputized the highly regulated financial system for political ends. Whether or not the motives of the messenger are pure is irrelevant. What matters is whether federal agencies engaged in a dangerous overreach of executive power and strayed far beyond their mandate to harass a legal industry. And the fact is that they did.

The verdict on Andreessen’s claims
So based on the full analysis, let’s evaluate the claims made by Marc on his Rogan appearance:

Debanking means being deprived of bank access as an individual or a firm, either because your industry is politically disfavored, or you hold dissident political views
In my view, this is an accurate description. Debanking doesn’t have more or less weight because the victim is unsympathetic from your perspective.

The CFPB is at least partially culpable, as are various other unnamed federal agencies
The CFPB definitely makes it a habit to harass fintechs and banks, and probably doesn’t need to exist. Based on what we know about Chokepoint 2.0 though, they aren’t the primary culpable agency. More directly involved are the FDIC, the OCC, the Fed, with coordination from the Biden White House. Contrary to what the critics say, the CFBP isn’t really a mitigating force, as they haven’t actually brought any cases pertaining to debanking, despite making some noises about it recently.

Debanking works by having the regulators outsource financial repression to the banks so that the government can’t be held directly responsible
This is an accurate description. Just like using big tech to censor dissidents, getting the banks or fintech platforms to kick off tech founders is an effective way to financially suppress regime enemies without facing too much scrutiny.

The primary victims of debanking under Obama were legal but disfavored industries — weed companies, adult businesses, and gun shops and firearms manufacturers
This is an accurate description of how Operation Chokepoint (which was an official Obama-era DoJ program) worked. It actually began with payday lending, which Marc doesn’t mention.

Crypto firms and entrepreneurs, alongside fintechs, have been the primary victims of debanking under Biden. Conservatives also occasionally get debanked simply for their political views
Certainly both true, although we have more evidence for the coordinated crackdown against crypto than the anti-fintech campaign (although we know the FDIC is going after fintechs by bringing enforcement actions against partner banks). Regarding the debanking of conservatives, we have plenty of anecdotal evidence of it happening, but as of yet no evidence of standing internal policies at banks. It seems to be done on a case by case basis, justified by “reputational risk”. Ultimately, the banks are total black boxes, and they don’t have to give reasons for derisking individuals or firms.

30 tech founders within the a17z portfolio have been debanked
Eminently possible and indeed quite likely. a16z is a very active active crypto investor and virtually every domestic crypto startup has faced banking issues at some point.

In what ways did Marc err?

He overstates the CFPB’s role a bit, as it is their sister regulators, the FDIC, the OCC, the Fed that are more responsible for the recent spate of crackdowns against crypto and fintech firms. However, he does specify that other unnamed ‘agencies’ are behind the debanking (although he doesn’t mention the FDIC, OCC, or Fed). And also, on the CFPB, Elizabeth Warren is the creator of the agency, and she was the individual most responsible for OCP2.0 (it was her appointees, specifically Bharat Ramamurti in the NEC, that led the charge under Biden). So I can forgive Marc for apportioning the CFBP outsize responsibility.
His discussion of politically exposed persons is a little simplistic. Being classified as a PEP does not result in your automatic exclusion from banking, but it does generally result in you being subjected to more due diligence. Marc may have been thinking of the Nigel Farage/Coutts/Natwest case, in which Nigel was considered a PEP, which was a factor in his debanking from Coutts.
Overall though, Marc is right and the critics are wrong. The CFBP is not (yet) some potent anti-debanking force. Debanking is real, it unequivocally applies to crypto and fintech, and more evidence of it will come out as Republicans take control and the inquiries are launched.

Appendix: Full transcript of Marc Andreessen’s relevant comments on the Joe Rogan podcast
[Extract beginning at 1:33:47]

Marc Andreessen: And then my favorite twist is we have this thing called independent federal agencies. So like for example, we have this thing called the Consumer Finance Protection Bureau, CFPB, which is sort of Elizabeth Warren’s personal agency that she gets to control. And it’s an independent agency that gets to run and do whatever it wants, right? And if you read the Constitution, there is no such thing as independent agency, and yet there it is.

Joe Rogan: What does her agency do?

MA: Whatever she wants. Basically, terrorize financial institutions, prevent new competition, new startups that want to compete with the big banks.

JR: Really?

MA: Oh yeah, 100%.

JR: How so?

MA: Just terrorizing anybody who tries to do anything new in financial services.

JR: Can you give me an example?

MA: Oh, you know, debanking. This is where a lot of the debanking comes from, is these agencies. So debanking is when you as either a person or your company are literally kicked out of the banking system.

JR: Like they did to Kanye.

MA: Exactly, like they did to Kanye, my partner Ben’s father has been debanked.

JR: Really? For what?

MA: For having the wrong politics. For saying unacceptable things. Under current banking regulations, after all the reforms of the last 20 years, there’s now a category called a politically exposed person, PEP. And if you are a PEP, you are required by financial regulators to kick them off, to kick them out of your bank.

JR: What? But what if you’re politically on the left?

MA: That’s fine. Because they’re not politically exposed.

JR: So no one on the left gets debanked?

MA: I have not heard of a single instance of anyone on the left getting debanked.

JR: Can you tell me what the person that you know did, what they said that got them debanked?

MA: Oh, well, I mean, David Horowitz is, you know, he’s pro-Trump. I mean, he’s said all kinds of things. You know, he’s been very anti-Islamic terrorism. He’s been very worried about immigration, all these things.

JR: They debanked him for that.

MA: Yeah, they debanked him. So you get kicked out of your bank account. You can’t do credit card transactions.

JR: How is that legal?

MA: Well, exactly. So this is the thing. This is where the government and the companies get intertwined. Back to your fascism point, which is, there’s a constitutional amendment that says the government can’t restrict your speech, but there’s no constitutional amendment that says the government can’t debank you, right? And so they, if they can’t do the one thing, they do the other thing, and then they don’t have to debank you. They just have to put pressure on the private company banks to do it. And then the private company banks do it because they’re expected to. But the government gets to say we didn’t do it. It was the private company that did it. And of course JP Morgan can decide who they want to have as customers, because they’re a private company. And so it’s this it’s this sleight of hand that happens it — basically it’s a privatized sanctions regime that lets bureaucrats do to American citizens the same thing that we do to Iran. Kick you out of the financial system. And so this has been happening to all the crypto entrepreneurs in the last four years. This has been happening to a lot of the fintech entrepreneurs, anybody trying to start any kind of new banking service because they’re trying to protect the big banks.

And then this has been happening, by the way, also in legal fields of economic activity that they don’t like. And so a lot of this started about 15 years ago with this thing called Operation Choke Point, where they decided to, as marijuana started to become legal, as prostitution started to become legal, and then guns, which there’s always a fight about. Under the Obama administration, they started to debank legal marijuana businesses, escort businesses, and then gun shops, just like your gun manufacturers, and just like you’re done. You’re out of the banking system. And so if you’re running a medical marijuana dispensary in 2012, guess what, you’re doing your business all in cash, because you literally can’t get a bank account. You can’t get a Visa terminal. You can’t process transactions. You can’t do payroll. You can’t do direct deposit. You can’t get insurance. Like none of that stuff — you’ve been sanctioned, right — none of that stuff is available.

And then this administration extended that concept to apply it to tech founders, crypto founders, and then just generally political opponents. So that’s been super pernicious.

JR: I wasn’t aware of that.

MA: Oh, 100%. It’s called Operation Choke 1.0, that was 15 years ago against the pot and the guns. Choke Point 2.0 is primarily against their political enemies and then to their disfavored tech startups. And it’s hit the tech world hard. We’ve had like 30 founders debanked in the last four years. It’s been a big recurring pattern. This is one of the reasons why we ended up supporting Trump. We just can’t live in this world. We can’t live in a world where somebody starts a company that’s a completely legal thing, and then they literally get sanctioned, and embargoed by the United States government through a completely unaccountable — by the way, no due process. None of this is written down. There’s no rules. There’s no court. There’s no decision process. There’s no appeal. Who do you appeal to, right? Like who do you go to, to get your bank account back?

And then there’s also the civil asset forfeiture side of it, which is the other side. That doesn’t happen to us, but that happens to people in a lot of places now who get arrested and all of a sudden the state takes their money.

JR: That happens to people if they get pulled over and they have a large amount of cash in some states.

MA: Right. There have been well-publicized examples — there’ll be some investigation into safe deposit boxes and the next thing you know the feds have seized all the all the contents of the safe deposit and that that stuff never gets returned. And so this is when Trump says the deep state — it’s administrative power. It’s political power being administered, not through legislation. So there’s no defined law that covers this. It’s not through regulation. You can’t go sue a regulator to fix this. It’s not through any kind of court judgment. It’s just raw power. It’s just raw administrative power. It’s the government or politicians just deciding that things are going to be a certain way, and then they just apply pressure until they get it.

JR: So what happens to those 30 tech people that you know?

MA: To go into a different field like try to do something different. Complete upending of your life. Try to get away from the eye of Sauron. Try to get out of whatever zone got you into this and keep applying for new bank accounts at different banks and hope that at some point a bank will say, you know, okay, you know, it’s okay. We’ve checked in. It’s now all right.

JR: So what do they do with their money? Like what happens?

MA: I mean, you go to cash.

JR: So where do you put it?

MA: Under your mattress. you put it. Yes, exactly.

JR: That is so insane. So if someone has 30 million dollars in the bank and they get debanked.

MA: Diamonds, arts, do you, I don’t know, go overseas somewhere? And again, there’s no fingerprints. Like there’s no person who… It just happened. And we can trace it back because we know the politicians involved and we know how the agencies work and we know how the pressures apply and we know that these banks get phone calls and so forth. And so we understand the flow of power as it happens, but when you’re on the receiving end of this, your specific instance of it, you can’t trace it back.

JR: So what are the instances? What is the company? What are they trying to do? And how do they run afoul?

MA: Well, all the crypto startups in the last, basically, four years. So remember the crypto thing, everybody got excited, and like, NFTs, and all that stuff. And then it just stopped. And the reason it stopped is because basically every crypto founder, every crypto startup, they either got debanked personally and forced out of the industry, or their company got debanked and so it couldn’t keep operating or they got prosecuted, charged or they got threatened with being charged.

This is a fun twist. So the SEC sort of has been trying to kill the crypto industry under Biden. And this has been a big issue for us because we’re the biggest crypto startup investor. The SEC can investigate you, they can subpoena you, they can prosecute you, they can do all these things. But they don’t have to do any of those things to really damage you. All they have to do is they issue what’s called a Wells Notice. And the Wells Notice is a notification that you may be charged at some point in the future.

You’re on notice that you might be doing something wrong and they might be coming after you at some point in the future.

JR: Oh my god. Terrifying. That’s the eye.

MA: The eye of Sauron is on you. Now trying to be a company with a Wells Notice doing business with anybody else. Try to work with a big company. Try to get access to a bank.

JR: That’s when they support DEI initiatives.

MA: Well the SEC under Biden became a direct application of DEI. They started they did a lot with that and then the ESG stuff — ESG is a very malleable concept and they piled all kinds of new requirements into that. So through this process the SEC could basically just simply dictate what companies do with no accountability at all. Like there are hearings where they get yelled at, but like nothing changed. Nothing ever happened in a hearing that ever changed anything. It was just the raw application of power, right?

JR: And this is your friends, this has happened to.

MA: Oh yeah, for sure, yeah. And we had, like I said, we had an employee who got debanked because he had crypto in his job title. He was doing crypto policy for us and his bank booted him. Because they did a screen across their customer base. And anyone involved with crypto became a politically exposed person because crypto was politically controversial. You hear this sometimes, it’s these terms, “compliance, reputation management, tone at the top.” They have these lovely sounding terms that make it sound like everybody’s going to be an upstanding citizen, but what they’re all code for is “destroy the enemy.” Bring the hammer of God and the bank and the government or whoever. Bring it down and just crush the individual with no due process.

And look, there’s an argument in the long run that this is all unconstitutional because the constitution gives us all the right to due process and this is government pressure. So there’s probably a Supreme Court case in five years that’s going to find retroactively that this was all illegal. But in the moment when you’re the guy who’s been debanked–

JR: And then also the potential that if you do challenge them in court and lose, the repercussions will be even heavier. Is it really worth your effort? Is it worth the risk? Especially if you’ve already had your life upended. You ready to do it again? Yeah, that’s right. When you barely built yourself back up?

MA: And I think this is important context, where like when Elon and Vivek talk about reducing regulation, there’s two ways of thinking about reducing regulation. It’s like, oh my God, the water in the air is going to get dirty and the food’s going to get poisoned. Now, some of those regulations, I think, are very important. But the other way to think about it is examples like this, which is just raw government power being applied to ordinary people who are just trying to live their lives, are just trying to do something legitimate, and they’re just on the wrong side of something that the people in power have decided.

JR: Well, there’s something that isn’t illegal, but they don’t want to be done like crypto.

MA: Exactly, like crypto, or having the wrong political points of view. The other great example is the trucker strike up in Canada was an even more direct version of this, because here you had truckers physically showing up, and it was something like step one was, they take away your driver’s license, which by the way, is just somebody pressing a button on the keyboard. No more driver’s license. Step two is I take away your insurance. And step three is I take away your kids. That was the threat at the end to the truckers, because the strike was gonna jam up these cities. They were doing a nonviolent protest, but they wanted to stall the cities to be able to exert political pressure back on the government. And the government was like, we’ll tolerate it for a little while. Then we’ll take your trucker license, then we’ll take your insurance, then we’ll take your kids.

JR: How do they say they would take their kids?

MA: Because it’s administrative power. The theory would be, these aren’t good parents if they’re sitting in a truck in the middle of Calgary preventing goods and services from reaching people, putting people’s lives at risk. You know, child seizure. Now I don’t know if they actually seized any kids, but it’s just an example of: there is an agency in the Canadian government, just like in the US government, that if they want to, they can take your kids.

JR: Well, they were doing debanking there with people who donated to the trucker convoy, which is even crazier. Not even people who were there, people who were opposed to the mandates that Trudeau’s administration was imposing on people. And so they donated to these truckers, and then they got their bank accounts taken away, which is really crazy.

MA: Exactly. And I think that I think that right way to think about this is when we think about totalitarianism we think about literally World War Two, you know we think about Nazis and jackboots with tanks and guns, beating people up and killing people. You might call it that hard totalitarianism, right? But there’s this other version you might call soft totalitarianism, which is just rules and power exercised arbitrarily that just simply suppresses everything. And this is speech control and debanking and all these other things that we’ve been talking about. The good news is they’re not coming up and like beating you up in the middle of the night. The bad news is you are under their complete control and they can do whatever they want to you that doesn’t involve physical violence, which basically includes every aspect of how you actually conduct your life and support your family and get an income and everything else.

JR: And most people aren’t even aware of it.
Source- Medium. Com