When a Wall Street banking giant and a crypto boss start a public battle over bank resolution, the world takes notice and the back and forth gets messy.
Jack Mallers, CEO of crypto payment firm Strike, dropped a bombshell on social media on November 23, saying that JPMorgan closed all of its accounts for no reason.
“Last month (September 2nd) JP Morgan Chase kicked me out of the bank,” Mallers said in a post on X. “It was bizarre […] Every time I asked them why, they said the same thing: ‘We’re not allowed to tell you’.”
The post went viral and drew reactions from personalities including Tether CEO Paolo Ardoino, who said, “I think it’s for the best,” and Grant Cardone, a multi-billionaire real estate mogul and equity fund manager, who in an X post called for a boycott and announced that he was transferring all his assets from JPMorgan.
Bo Hines, a former digital asset adviser to President Donald Trump and now a strategic adviser to Tether, reminded the bank that X “You know Operation Chokepoint is over? Just checking.” After the crypto-friendly president took office, regulators reversed many Biden-era directives against crypto entities.
“Operation Chokepoint 2.0 unfortunately lives on,” said Senator Cynthia Lummis. “Policies like JP Morgan’s are undermining trust in traditional banks and sending the digital asset industry overseas.”
While a banking giant bankrupting a company is not unusual and often goes unreported, this one struck a nerve with the crypto community, given Maller’s and Strike’s positions in the industry and previous US government responses.
“While big banks often freeze accounts, it’s hard to ignore the timing of Mallers’ JPMorgan debanking,” said Timothy O’Regan, an emerging market fund expert and IronWeave founder.
The cancellation letter
Mallers sat on the debanking letter from JPMorgan Chase ( JPMC ) for two months before revealing it. In it, the bank notified the founder of Strike, a bitcoin payment app with an estimated 800,000 monthly active users, that it was closing his accounts due to concern activity.
“We have decided to close your accounts,” reads Chase’s letter to Mallers, which led many to believe the closure related to anti-money laundering (AML) and know-your-customer (KYC) concerns JPMorgan Chase may have linked to Strike users.
“In the course of ongoing monitoring, we have identified concerning activity on your account or an account with which you are associated. Pursuant to the Bank Secrecy Act and other regulations, financial institutions are required to periodically review the conditions of our customers,” the letter adds.
Seeking more clarity, CoinDesk reached out to both parties for comment and to get to the bottom of this debanking saga.
Patricia Wexler, a spokeswoman for JPMorgan, declined to comment.
However, a source familiar with JPMorgan Chase told Coindesk that “JPMorgan banks crypto companies across the industry, provides payment services and acts as a financial advisor.”
As the debate rages, Mallers decided to put the saga to rest, at least for now. Strike’s press team declined to comment on the matter.
“We are not commenting further here,” said Alex Modiano, a spokesman for Mallers. Randall Woods, another senior press officer at Strike, responded similarly
What does it all mean? While both parties remain silent, a source familiar with the banking giant pointed to confidentiality rules and other issues as an explanation. They also pointed to a Cato Institute X paper published on the topic, which says, “Reforming the secrecy surrounding the Bank Secrecy Act would go a long way toward achieving more transparency about bank lending.”
A question of timing
Under the BSA, all banks are forced to remain silent because FinCEN (Financial Crimes Enforcement Network) guidance prohibits disclosure of suspicious activity reports (SAR) to avoid tipping off suspects in potential money laundering or other illicit financial investigations.
Regarding the timing, IronWeaves O’Regan suggested that the sudden closure of Mallers’ accounts could be related to JPMorgan’s recent rollout of JPMCoin, which is similar to Strike.
They both move money extremely quickly, although one, JPMCoin, is exclusive and controlled by the bank, while the other, Strike, is open to the wider public.
De-banking a potential future competitor, just weeks after JPMorgan rolled out its own token, raised questions of potential conflict of interest, said O’Regan, who argued that major US banks are silently de-banking crypto executives, using the Banking Secrecy Act (BSA) as an excuse for not providing any explanations.
“Debanking the CEO of a major bitcoin finance company while rolling out quasi-computing products could easily be seen as casting a shadow over a competitor,” he added.
