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February 18, 2025
Cadwalader counsel Mercedes Kelley Tunstall spoke with Wired about the complicated relationship between banks and #crypto in an article, "Chokepoint 2.0: An Investigation Promises the Truth About Crypto's Biggest Conspiracy," published February 18.
In the crypto space, it can be very difficult to obtain ordinary financial services from banks. Many crypto companies have reported having a hard time finding a bank willing to even open a checking account for them. This problem has led to many in the industry claiming that there is a conspiracy by the federal government to cut the crypto industry out of the banking system.
While most agree that banks are reluctant to do business with crypto-related organizations, experts have offered other explanations for the phenomenon.
“I don’t believe that there was any conspiracy,” said Mercedes. “You’ve got a real concern about money laundering, fraud, and terrorist financing occurring with cryptocurrency.”
After FTX collapsed amid allegations of fraud, said Mercedes, the banks had particular reason for limiting the number of crypto clients they worked with: Both to protect themselves from the reputational risk associated with providing services to a company later revealed to be fraudulent and the operational risk tied to the possibility that other crypto businesses might become casualties in the FTX fallout.
“The banking industry is very gossipy,” she said. “I think there was maybe a crowd mentality driving [the unwillingness to work with crypto businesses] but not anything more nefarious than that.”
Read the full article here.
