Bank of America is reportedly targeting Coinbase by closing the accounts of parties that did business with the US cryptocurrency exchange while facing Possibly the next victim of the American banking crisis.
The ban rumors first surfaced after Stacks founder Muneeb Ali claimed that the account he used for Bitcoin investments had been closed.
Could the bank target Coinbase?
Ali’s allegation prompted Coinbase CEO Brian Armstrong to see if more Coinbase users closed their accounts. About a tenth of the 8,500 respondents answered yes, while 20% said no.
If this is true, the alleged Account closure may be an extension of the Choke Point 2.0 process. The term was coined by venture capitalist Nick Carter earlier this year.
The term refers to a deliberate effort by banks and regulators to deny legal but politically polarized industries such as crypto access to banking services. It gained popularity after the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation issued a joint statement warning that banks dealing with cryptocurrencies will face greater scrutiny.
The lawsuit filed by the US Securities and Exchange Commission (SEC) against Coinbase makes things even more interesting.
The Securities and Exchange Commission said last month that Coinbase operates an unregistered brokerage for trading in unregistered securities that denies investors legal protections. Since the lawsuits, Coinbase’s share of the US cryptocurrency trading market has fallen by 11%.
Refusing banking services could further damage the US company’s business.
Will Bank of America become the next victim of the banking crisis in the United States?
But Bank of America itself may be sitting on a ticking time bomb.
Resala Kobeissi, a capital markets commentator, warned that Bank of America faces $100 billion in paper losses through its debt investments. The bank invested $670 billion of the deposits it accepted during the pandemic in high-priced, low-yielding bonds.
If he had a large flow to the bank, he would likely need to sell these instruments at a huge loss.
Silicon Valley Bank, one of the banks involved in the second-biggest US banking crisis in March, also faced a liquidity shortage. The withdrawal demands forced her to sell the securities at huge losses.
Are you tired of being scammed by banks and want to explore cryptocurrency? Read our comparison of cryptocurrencies and banks here.
In addition, Bank of America has to pay $250 million in penalties after it was found to have charged customers twice overdraft fees, refused to pay bonus bonuses, and opened new customer accounts without their permission.
The investment bank must pay clients $100 million, the Comptroller of the Currency $60 million, and the Consumer Financial Protection Bureau $90 million.
CFB has recently turned its attention to the unnecessary, sometimes exploitative fees that banks burden customers with. JPMorgan, Wells Fargo, BofA and others have been under the spotlight.
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