In November, a conspiracy popular among crypto acolytes burst into the tech mainstream as Marc Andreessen spread the gospel of “Operation Chokepoint 2.0” on Joe Rogan’s podcast. Over the three-plus hour episode, the a16z cofounder spoke of the plot by financial regulators under the Biden administration to cut off banking access to the crypto industry because of its politically disfavored status. a16z crypto later published a post defining “debanking” as a “tool or weapon” that can be “systematically wielded” by politicians and agencies to neuter entire sectors.
Crypto VC Nic Carter first popularized (and named) the theory of Operation Chokepoint 2.0 in early 2023, soon after the collapse of FTX, as regulators like the Federal Reserve and FDIC began to issue public guidance about the risks that banks face by working with the volatile crypto industry. (He just published an op-ed in Fortune yesterday if you want to read his full take.)
I’ve long been skeptical about the premise, which is based on a real, covert effort by the Department of Justice in the early 2010s to cut off banking access to specific sectors with high risk for fraud and money laundering, including payday lenders, pornography, and firearm dealers, though the ethics around it are still disputed. The key difference is that the DOJ initiative in 2013 happened only behind closed doors. In 2023, regulators were open about their hesitance around crypto, stating concerns through public guidances and speeches.
The job of financial regulators is to promote safety and soundness. They will never tell banks that they cannot work with specific legal industries, but instead will communicate through public and private channels that certain business lines could open institutions to increased supervision and risks. There’s no question that banks began to cut off services to crypto companies in early 2023, but the simplest explanation is that banks were worried about the increased costs and pitfalls posed by the crypto sector, not that they were secretly blocked by a cabal of regulators for political reasons.
But proponents of Operation Chokepoint 2.0 believe the conspiracy went deeper, and that agencies including the Fed and FDIC specifically told banks that they could not work with crypto firms. Carter has maintained that the FDIC communicated to banks that only 15% of their deposits could come from crypto companies—a guidance he says they issued verbally to “obfuscate their crackdown activities.” (There’s also a debate about whether regulators shut down the two largest banks serving the blockchain industry, Silvergate and Signature, simply because of their work in crypto, but that would take up a whole other essay.)
Even as Andreessen’s podcast appearance raised awareness around the narrative, and seemed to establish it as fact in many circles, proponents have yet to surface any hard evidence. Coinbase, for example, sued the FDIC under the Freedom of Information Act to obtain confidential crypto banking correspondence, finally winning a trove of heavily redacted documents last week where the FDIC asked banks to “pause” crypto-related activity as it developed supervisory expectations. “That’s all wholly consistent with the public statements that the banking regulators made,” Steven Kelly, the associate director of research at the Yale Program on Financial Stability, told me.
I spoke with Carter and Paul Grewal, Coinbase’s chief legal officer, who both agreed that the claims of debanking lack a smoking gun: any proof that regulators not only voiced concerns about crypto, but told banks not to work with companies and individuals in the space or imposed a hard limit. “Can I say I yet have the full picture of what was communicated and to what degree?” Grewal told me. “I can’t, no question.” Still, he said that he expects more proof to come out, pointing to the FDIC’s aggressive redactions as a sign that the agency is trying to prevent key information from coming to light.
Carter insists that the agencies verbally guided the banks, which will make it difficult for any documentation to be disclosed. With the Trump administration just a month away and Republican lawmakers eager to open investigations, we might get more answers in the coming weeks. But until then, as Carter said, “All we have is circumstantial evidence.”
Leo Schwartz
Twitter:@leomschwartz
Email: leo.schwartz@fortune.com
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VENTURE DEALS
- Intersect Power, a remote low-carbon solutions provider, raised $800 million in funding. TPG Rise Climate and Google led the round and were joined by Climate Adaptive Infrastructure and Greenbelt Capital Partners.
- Speak, a San Francisco-based AI language tutor, raised $78 million in Series C funding. Accel led the round and was joined by existing investors Khosla Ventures, the OpenAI Startup Fund, Y Combinator, and others.
- Stainless, a New York City-based SDKs provider for API users, raised $25 million in Series A funding. a16z led the round and was joined by existing investors Sequoia, The General Partnership, and others.
- Pixxel, a Bengaluru, India-based hyperspectral imaging technology developer, raised $24 million in a Series B extension from M&G Catalyst, Glade Brook Capital Partners and existing investors Google, Radical Ventures, Lightspeed, and others.
- RapidCanvas, an Austin-based data and engineering-focused AI agents developer, raised $16 million in funding. Peak XV led the round and was joined by Titanium Ventures and existing investors Accel and Valley Capital Partners.
- Cake, a New York City-based AI infrastructure platform, raised $13 million in funding. Primary Venture Partners led the $3 million pre-seed round and was joined by angel investors. Gradient led the $10 million seed round and was joined by Alumni Ventures, Friends & Family Capital, Correlation Ventures, Firestreak Ventures, and existing investor Primary Venture Partners.
- Vooma, a San Francisco-based freight brokers and carriers logistics AI agent, raised $13 million in Series A funding. Craft Ventures led the round and was joined by Definition Capital, HOF Capital, Soma Capital, and others.
- Flocean, an Oslo-based desalination technology developer, raised $9 million in Series A funding. Burnt Island Ventures, Nysnø Climate Investments, and Freebird Partners led the round and were joined by Katapult Ocean, MP Pensjon, and others.
- Wafeq, a Dubai, UAE-based accounting and e-invoicing platform, raised $7.5 million in Series A funding. 9900 Capital led the round and was joined by Raed Ventures and Wamda Capital.
- Partful, a Manchester, England-based manufacturing aftersales solutions provider, raised £5 million ($6.4 million) in funding. Northern Gritstone led the round and was joined by Par Equity and Blumberg Capital.
- HiringBranch, a Montreal-based AI-powered soft skills assessor, raised $5 million CAD ($3.5 million) in Series A funding. Crédit Mutuel Equity led the round and was joined by Export Development Canada and Anges Québec.
- Wald, a Palo Alto-based context-aware data protection platform, raised $4 million in seed funding from Inventus Capital, Entrada Ventures, and angel investors.
- Powernaut, a Ghent, Belgium-based decentralized energy systems orchestration software developer, raised €2.4 million ($2.5 million) in pre-seed funding. Revent led the round and was joined by Seedcamp, Pitchdrive, and Syndicate One.
- Paidly, a Rochester, N.Y.-based student loan benefits platform, raised $2 million in Series A funding from S30Build.
- Uplift360, a Luxembourg-based recycling technologies developer for advanced industrial materials, raised €1 million ($1.1 million) in pre-seed funding. Promus Ventures led the round and was joined by Twin Track.
PRIVATE EQUITY
- Bluestone Equity Partners, joined by Mosaic General Partners, RPM Ventures, SiriusPoint, and TriplePoint Capital, invested $60 million in Series C funding in Players Health, a Minneapolis-based risk services and insurance provider for athletes and sports organizations.
- Ardian acquired Atout-Box, a Montpellier, France-based self-storage company. Financial terms were not disclosed.
- Build A Rocket Boy, backed by RedBird Capital Partners and others, acquired PlayFusion, a Cambridge, England-based game developer and publisher. Financial terms were not disclosed.
- CES Power, backed by Allied Industrial Partners, acquired Base Craft, a Kansas City-based equipment provider for the film industry. Financial terms were not disclosed.
- Graham Partners acquired a majority stake in Becklar, an Ogden, Utah-based connected safety solutions provider and portfolio company of BV Investment Partners. Financial terms were not disclosed.
- New Heritage Capital acquired a majority stake in JA Moody, a Jacksonville-based maritime parts and services supplier. Financial terms were not disclosed.
- OpenClinica, a portfolio company of Thompson Street Capital Partners, acquired BuildClinical, a New York City-based academic research patient recruitment solution. Financial terms were not disclosed.
- PrimeSource Brands, backed by Clearlake Capital Group, acquired Harney Hardware, a Tampa-based door and bathroom hardware provider. Financial terms were not disclosed.
EXITS
- Lee Equity Partners acquired a majority stake in Cooper Parry, a Derby, England-based accounting firm, from Waterland Private Equity. Financial terms were not disclosed.
OTHER
- Cohesity acquired the enterprise data protection business of Veritas, a Santa Clara, Calif.-based enterprise data management company. Financial terms were not disclosed.
- CookUnity acquired Cookin, a Toronto-based business management platform for culinary entrepreneurs. Financial terms were not disclosed.
IPOS
- ServiceTitan, a Glendale, Calif.-based business management software provider for services contractors, plans to raise $589.6 million in an offering of 8.8 million shares priced between $65 and $67 on the Nasdaq. The company posted $685 million in revenue for the year ending July 31, 2024. Battery Ventures, Bessemer Venture Partners, ICONIQ Growth, TPG, and Index Ventures back the company.
- Laude Ventures, a San Francisco-based venture capital firm, raised $150 million for its first fund focused on technical infrastructure and applications.
PEOPLE
- AlleyCorp, a New York City-based venture capital firm, added Kenneth Auchenberg as a partner. Previously, he was at Stripe.
