Not requiring a public heavy-handed approach, JPMorgan Chase has quietly shut the bank accounts of Uniswap Founder Hayden Adams, without any explanation or prior notice.
Conventional banking establishments and the crypto industry have never been great friends. But now these financial institutions have reportedly started closing accounts of prominent people from the crypto world, without any explanation. Hayden Adams, the founder of Uniswap (UNI), the largest decentralized crypto exchange (DEX) in the world, is the latest victim of such a move.
On Sunday, Jan 23, Adams tweeted that JPMorgan Chase, the American multinational investment bank had closed all his bank accounts without any prior notice.
The Chase support team replied by copy pasting a pre-written response, admitting that he had “a less than ideal experience,” and asked him to contact them with his name, zip and other details, to tackle the problem.
With a $6.6 billion market cap, Uniswap decentralised crypto exchange is a direct competitor of banks. Interestingly, earlier in Sep 2021, the US Securities and Exchange Commission (SEC) had initiated an investigation against Uniswap Labs, offering no specific reason. The Wall Street Journal had reported the story, citing sources familiar with the matter that SEC attorneys were investigating how investors use the DEX platform and how they market their services. A Uniswap Labs spokesperson even informed the WSJ stating that the company is “committed to complying with the laws and regulations governing our industry and to providing information to regulators that will assist them with any inquiry.”
The move is most likely a case of shadow de-banking
Brian Quintenz, the ex-Chairman of US CFTC (Commodity Futures Trading Commission), who works as an advisory partner with Andreessen Horowitz (a crypto investment firm) now, responded to Adams’ tweet stating, “Likely a shadow de-banking of crypto by [The Federal Reserve] or [The Office of the Comptroller of the Currency] bank examiners, with direction from the top. If the examiner told a bank that a certain customer is too risky and the bank ended that relationship, the bank is contractually prevented from telling that customer why.” He further cited Wyoming’s pro-crypto senator Cynthia Lummis’ Nov 2020 article in the Wall Street Journal to drive home his point.
It’s worth noting that this isn’t the first instance of JPMorgan Chase abruptly closing a crypto firm/executive’s account. It closed cryptocurrency exchange ShapeShift’s founder Erik Voorhees’ account in 2018. Kraken’s payroll account was shut down at one point too.