On Sunday, the founder of the largest decentralized exchange protocol Uniswap, Hayden Adams, tweeted that his JPMorgan Chase & Co bank account were shut down without giving notice or an explanation for the closure and that he's not the only one to be targeted this way.

In September, Uniswap Labs, the developer of the world's largest decentralized exchange protocol, was reportedly being investigated by the Securities and Exchange Commission (SEC) enforcement attorneys about how investors use the decentralized exchange protocol and how it is marketed.  Although the motives for the debanking are not clear.

Adams further stated that the incident was personal in nature as he knew "many individuals and companies who have been similarly targeted simply for working in the crypto industry."

The former US Commodity Futures Trading Commissioner Chairman Brian Quintenz responded with a comment suggesting that the move was likely an instance of "shadow de-banking of crypto by the Federal Reserves and Office of the Comptroller of the Currency bank examiners." He further explained that when the examiner in the bank tags risky, the customer doesn’t get prior notice or to know the reason for closing the account and ending the business relationship.

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As per U.S. financial regulation, before broker-dealers can facilitate clients' trades, they need to register with the Financial Industry Regulatory Authority (FINRA). As funds are stored in consumers' wallets and not classified as securities, Uniswap, does not need to register with relevant regulatory bodies. No further information was provided by Quintenz to support his claim. There a link was provided to Wyoming Senator Cynthia Lummis' which in November was published in the Wall Street Journal.

A similar incident took place earlier:

Prior to this also JP Morgan has closed the bank accounts of other crypto figures. A few years ago, Chase shut down Kraken’s payroll account where the bank gave a 5-day notice before doing so. 

Indrani Bose

CBW - External Analyst

INDIA