UniSwap Founder’s Bank Account Shut DownJanuary 30, 2022 2:32 pm
The founder of the decentralized exchange, UniSwap, recently announced that his bank accounts were shut down by JP Morgan Chase for no reason.
Hayden Adams, the founder, has commented that he believes that this shut down was intentional by the bank as their have been previous cases of banks who have targeted individuals who have been involved in the crypto industry.
To provide some context, UniSwap is currently one of the most popular decentralized exchanges in the world and the UniSwap coin, UNI, currently has a total market cap of around $6.9 billion making it one of the top networks that is used today.
lolz! Time for ppl to be their own bank.https://t.co/MzVSZ5IB45
— Kila (@0xkila) January 24, 2022
Former Commodity Futures Trading Commissioner 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.”
Quintenz explained that banks are contractually prevented from telling customers the reason for ending the business relationship if they deem them too risky.
Although most users commiserated with Adams on the alleged debanking, others maintained that there is no universal right to a bank account and, therefore, banks have the discretion to act as they deem fit.
Quintenz did not offer any further information to support his claim but provided a link to Wyoming Senator Cynthia Lummis’ opinion piece published in the Wall Street Journal in November.
In the article, Lummis criticizes the Fed for its failure to register several Wyoming-based, crypto-related special purpose depository institutions (SPDIs) as banks, thus preventing them from getting access to the federal payment system.
It seems that this is something that apparently happens quite often to prominent institutions and individuals within the crypto industry, especially since the massive growth the market experienced last year in 2021.
Kraken CEO Jesse Powell also shared his own experience from 2018 when Chase had decided to close Kraken’s payroll account without giving any reason why and provided only a 5 day short notice.
This then brings us to the question of how exactly do banks assess the “risk” level of a customer to be able to suddenly debank them?
So far, there are no public details to provide on how that decision is made, but one can only guess.
The SEC had also started to examine UniSwap’s developers and managing firm last year regarding the investor services that they provide which was likely an attempt to see if regulatory compliance was being followed.
Uniswap Founder’s Financial institution Account Receives Shut Down By JPMorgan https://t.co/yBFMulq41A
— News 4 Social (@newsforsocial) January 25, 2022
Yahoo shares more past examples:
In 2018, it also shut down Erik Voorhees’s account. Erik Voorhees is the founder of the crypto exchange ShapeShift. The bank also shut down accounts belonging to Bitcoin mining firm Compass Mining in 2019.
These moves from the bank make it difficult to understand its stance towards crypto.
While it’s closing down crypto affiliated accounts, it has also been taking on a crypto exchange such as Coinbase and Gemini as customers. Beyond that, the bank also offers its wealthy clients access to crypto investment funds.
With that being said, the recent news did not affect the price of UniSwap or shake investor’s confidence in the DEX.
Uniswap is currently the largest DEX globally, with a 24-hour trade volume of $2.74 billion.
Trending on #LunarCrush:
"Uniswap founder’s bank account shut down by JP Morgan Chase, shadow-debanking allegations surface" via @Cointelegraph
— Ajeet Maurya (@iamajeetmaurya) January 24, 2022
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