GuShiio.com The SEC’s encryption litigation director, who was famous last year, is now repairing computers in the IT department.
author| jk, Odaily Planet Daily
With the coming to power of the Trump administration, senior regulators who once dominated U.S. anti-encryption policy are now facing full liquidation. Major financial regulators such as the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), and the Commodity Futures Trading Commission (CFTC) are undergoing massive personnel changes and policy shifts. It can be seen that Washington’s regulatory attitude is undergoing fundamental changes. Below, the Odaily Planet Daily takes you to see what these changes and liquidations have brought to the industry.
SEC: Gary Gensler’s team leaves, pro-crypto people move in, law enforcement procedures change
SEC, new officials take office
At the SEC headquarters at 100 F Street in Washington, D.C., the atmosphere is quietly changing. As Trump took office, Gary Gensler resigned the same day, and pro-encryption Mark Uyeda became acting chairman, temporarily taking over the chairmanship until the nomination of new chairman Paul Atkins was confirmed. This building with beautiful glass facades is no longer a public enemy of the encryption industry, but has become a truly friendly regulator.
On February 5, local time in the United States, two people familiar with the matter revealed that the U.S. SEC currently requires its lawyers to obtain high-level approval before formally launching an investigation. The new requirements stipulate that law enforcement officers must obtain permission from politically appointed commissioners before issuing subpoenas, requesting documents and coercing testimony. There are currently three commissioners: Acting Chairman Mark Uyeda, Hester Peirce (Crypto Mom) and Caroline Crenshaw (Democratic Commissioner). During the previous administration, the SEC only needed approval from two law enforcement directors to formally launch investigations, and law enforcement officers could continue informal investigations without commissioner approval, including sending information requests.
At the same time, I believe many readers already know that SEC Acting Chairman Mark Uyeda has established a new cryptocurrency working group, led by a crypto-friendly member known as the “Crypto-Mom” Hester Pierce, with the ultimate goal of providing regulatory clarity and proposing a clear set of cryptocurrency regulatory frameworks (similar to the EU’s MiCA). In a follow-up to the news, Acting Chairman Mark Uyeda appointed Landon Zinda, former policy director of the cryptocurrency advocacy group Coin Center, to the committee as his legal adviser and senior adviser to the cryptocurrency working group.
On the website of the SEC's Cryptocurrency Working Group, the SEC's support is very obvious, and it even provides an email address for crypto people to directly contact the SEC. Source: SEC official website
Hester Peirce said: “The Cryptocurrency Working Group is considering recommending that the SEC take action to provide temporary, forward-looking and retrospective relief for token offerings (as opposed to previous SEC retrospective enforcement), in which the issuing entity or other entity willing to take responsibility provides certain specific information and keeps it updated, and agrees not to challenge the SEC’s jurisdiction in cases alleging fraud related to the purchase and sale of assets.”
Is liquidation coming? Anti-crypto activists are marginalized
Odaily previously reported that almost all senior legal officials working under Gary Gensler’s leadership, including law enforcement and the General Counsel’s Office, have left, and it is speculated that his entire team has left. Previously, the SEC’s chief economist Jessica Wachter, chief accountant Paul Munter and general counsel Megan Barbero have also left.
But what should we do for those who don’t leave?
According to reports, the SEC has reappointed Jorge Tenreiro, a former deputy director of the crypto assets and networks division and a crypto litigation lawyer, to its Computer Systems Management (IT) division. Tenreiro has worked for the SEC for more than 11 years. According to his LinkedIn information, he was initially a law enforcement lawyer and then the head of the agency’s cryptocurrency enforcement division from October 2022 to November 2024.
Tenreiro has been involved in multiple SEC enforcement cases against cryptocurrency companies, such as lawsuits against Ripple and Coinbase. Since President Trump took office, the SEC has undergone a major shift in its stance, reducing the size of its crypto enforcement division.
FDIC: Regulatory hostility completely disappears, crypto banking services may return
The FDIC (Federal Deposit Insurance Corporation) is an independent agency in the United States that insures bank deposits and protects depositors from compensation of up to US$250,000 in the event of bank failure. The FDIC regularly reviews banks ‘balance sheet positions, evaluates risks, prevents improper business practices, and takes corrective measures when problems are discovered, and can even close banks that are seriously violating or are insolvent. In addition, the FDIC is responsible for taking over and liquidation when a bank goes bankrupt, protecting the interests of depositors and maintaining the security and stability of the financial system. If a bank fails, the FDIC usually arranges for another bank to take over the deposit or directly reimburse the depositors, making the banking system safer and more reliable.
Simply put, the FDIC is the national bank insurance of the United States, ensuring the safety of consumers ‘deposits in banks. Previously, when Silicon Valley Bank went bankrupt, the FDIC was responsible for the aftermath and follow-up arrangements.
Why is national bank insurance related to the crypto industry?
Because of its regulatory role, the FDIC was not actually a good name for the crypto industry before; the FDIC restricted the crypto industry’s access to banks and attracted complaints from the entire crypto industry.
Imagine if you opened a crypto company or project, you couldn’t open an account with any of the major U.S. banks, and you couldn’t get any of the banking services you should have for commercial projects. This is Operation Choke Point 2.0 (translated as “Operation Blocking” or “Operation Stuck Neck” 2.0), a policy that prohibits crypto projects from enjoying banking services, and the FDIC is the main regulatory implementer of this policy. We will talk about this policy soon.
This is not groundless. Nathan McCauley, CEO of Anchorage Digital, said at a U.S. Senate “de-banking” hearing that although Anchorage Digital is a federally licensed crypto bank, it was still denied services by banks, causing damage to its business and even laying off 20%. McCauley pointed out that between 2021 and 2023, U.S. regulators gradually pressured banks to stay away from the crypto industry, including a number of policies jointly issued by the OCC, FDIC, SEC, Federal Reserve, etc., which made banks generally reluctant to cooperate with crypto companies, resulting in many crypto companies Unable to obtain basic banking services, some were even forced to shut down.
Joseph Lubin, CEO of Consensus sys, said the company had twice been tried by U.S. authorities to cut off access to the financial system and was a victim of Operation Chokepoint 2.0. In the latest incident, a large U.S. bank, known to be Wells Fargo, finally closed its Consensus sys account after coming under pressure from regulators. Lubin revealed that the bank initially tried to delay execution and expressed support for Consensus sys, but ultimately could not withstand the pressure. In addition, Lubin himself was also targeted in this liquidation operation.
What is different about today’s FDIC?
With Trump taking office, the FDIC has also changed.
The Federal Deposit Insurance Corporation (FDIC) recently announced that it is actively reassessing its regulatory approach to cryptocurrency-related activities, including withdrawing and replacing the Financial Institutions Letter (FIL) 16-2022) to provide a compliance path for banking institutions to participate in cryptocurrency and blockchain-related activities while complying with the principles of security and robustness. The FDIC plans to work with the Digital Asset Markets Working Group established by Trump Executive Order to optimize the regulatory framework.
Travis Hill, acting chairman of the FDIC, who has criticized the FDIC’s stance for hindering banks from exploring blockchain and digital assets, said: “I have always criticized the FDIC’s attitude towards crypto assets and blockchain in the past. As I said in March last year, the FDIC’s approach ‘has led to the widespread belief that if an institution is interested in anything related to blockchain or distributed ledger technology, the institution cannot do business.'” After taking office, Hill initiated a review of all regulatory communications related to crypto banks, saying: “After becoming acting chairman, I directed employees to conduct a comprehensive review of all regulatory communications with banks that attempt to provide crypto-related products or services.”
To improve transparency, the FDIC recently released 175 documents detailing its supervision of banks conducting crypto-related business. These changes mean that banks can hold customers ‘cryptocurrencies and will be insured by the FDIC.
Operation Choke Point 2.0: Coming to an end, participants may be held accountable and liquidated
How powerful is Operation Choke Point 2.0?
As we have just mentioned, Operation Choke Point 2.0 is a policy that prohibits crypto projects from enjoying banking services. In fact, the scale of this operation may be far beyond readers ‘imagination.
Blockworks describes it this way: If FTX is a butterfly flapping its wings in the Amazon rainforest, then “Operation Choke Point 2.0” is the torrential rain that is now pouring on the U.S. cryptocurrency industry.
The action was led by Biden White House, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Department of Justice, together with “influential people in Congress”, committed to depriving the cryptocurrency industry of legal currency channels in an effort to completely stifle the industry.
Senators Roger Marshall, Elizabeth Warren and John Kennedy put pressure on Silvergate, and Signature Bank significantly reduced cryptocurrency-related deposits in December 2023. In January 2024, the FDIC, OCC and the Federal Reserve jointly stated that they “strongly discouraged” banks from supporting the crypto business, and then Metropolitan Commercial Bank completely closed its crypto business.
At the same time, crypto companies trying to gain control of their own fiat channels have also encountered resistance. At the end of January, Federal Reserve officially rejected Custodia (formerly Avanti)’s application to join the Federal Reserve system, which has been delayed for more than two years. Although Anchorage became the first national trust bank to receive conditional approval in 2021, Paxos and Protego have not yet been approved. The government’s classification of cryptocurrency banks as “high-risk” will have four major negative impacts, including increased insurance premiums by the FDIC, reduced capital ratios by Federal Reserve (which limits overdraft capabilities), restrictions on business activities, and reduced regulatory review scores (which affects mergers and acquisitions capabilities), further exacerbating the isolation of banks from the crypto industry.
Moreover, most of the above behaviors are traceless. In other words, cryptocurrency companies are not only unable to sue, but may not even find evidence at all. Many of the people who promoted this matter hid behind the screen and secretly exerted pressure.
All this has been reversed since Trump took office.
What is the attitude of U.S. regulators today?
The U.S. Congress first held a hearing on Operation Choke Point 2.0, inviting people in the encryption industry to describe how it was “stuck.” U.S. Rep. Meuser said at the hearing that the Biden administration’s Operation Choke Point 2.0 was implemented by regulators and specifically targeted and debanked the digital asset ecosystem.
“Through private conversations and formal regulatory threats, the FDIC has pressured banks to refuse to serve digital asset companies, their employees, and even their customers.
This was a serious abuse of power that not only stifled innovation, but also directly harmed consumers by preventing them from accessing new, potentially beneficial financial products…
Just yesterday, Acting Chairman of the Federal Deposit Insurance Corporation Travis Hill publicly exposed the Biden administration’s Operation Choke Point campaign, which led to the de-banking of cryptocurrency companies across the country… The FDIC has promised to correct this issue in the future, and I will continue to monitor its rectification progress and explore legislative solutions to ensure that such incidents do not happen again.
“Free markets can prosper only if innovation is fully developed. It is the responsibility of regulators to protect our financial system-but this should not be at the expense of the development of legitimate businesses such as energy companies and cryptocurrency companies.”
An official hearing in the U.S. Congress recognized the existence of Operation Choke Point 2.0. Source: YouTube
Meanwhile, U.S. federal judge Ana C. Reyes severely criticized the FDIC’s actions in Coinbase’s case against the Federal Deposit Insurance Corporation. The lawsuit stems from Coinbase’s attempt to obtain documents that the FDIC sent a “suspension letter” to banks to restrict cryptocurrency-related activities, which was evidence of Operation Choke Point 2.0. Judge Reyes noted that the FDIC failed to provide a large number of documents related to Coinbase’s previously filed Freedom of Information Act (FOIA) requests and may have destroyed some case information.
Ana C. Reyes directly questioned the FDIC at the hearing: “Can you explain why the FOIA request is interpreted in such a narrow way? Its content is obvious and not understood as you (restrictively).” Excerpts from some of the conversations are as follows:
Andrew Dober (FDIC Representative Attorney): Yes, Your Honor, I can–
The Court: No, you answer my question directly.
Andrew Dober: I do have a statement on these issues, Your Honor. The FDIC implored the court to suspend the case for three weeks–
The Court: No, no. I want you to answer my question now.
Andrew Dober: Because of the leadership change–
The Court: Now I want you to answer my question.
Andrew Dober: Yes, Your Honor. Could you repeat these questions?
The Court: Who took such a narrow and illogical interpretation of the FOIA request?
Andrew Dober: Your Honor, I think that was the way it was understood at the time–
The Court: I didn’t ask you how you understood it, but who did it. This interpretation is almost ridiculously narrow. Who is it?
“It’s shocking to see a federal judge berating a federal agency’s lawyers in this way,” said Scott Johnsson, a partner at VBCapital, according to The Block.
Judge Reyes not only planned to summon FDIC staff work permits in mid-February, but also warned that “life will become very, very unhappy for the FDIC” if the FDIC does not cooperate. She further questioned whether the FDIC had taken the document retention measures required by law and pointed out that Andrew Dober could face “serious sanctions.”
And reckoning is also coming. U.S. Senator Cynthia Lummis said the U.S. Senate Banking Committee found the first conclusive evidence of Operation Chokepoint 2.0 today. “Please rest assured that the Digital Assets Subcommittee will find relevant parties and hold them accountable,” she said.
CFTC: Reorganizing law enforcement
On February 5, 2025, Caroline Pham, Acting Chairman of the U.S. Commodity Futures Trading Commission (CFTC), announced that the agency had reorganized its enforcement department to more focus on combating fraud and stop replacing regulatory functions with enforcement actions. This reform aims to optimize resource allocation, improve law enforcement efficiency, and ensure market integrity.
Under the leadership of former Chairman Rostin Behnam, the CFTC’s law enforcement division established multiple working groups responsible for regulation in areas such as insider trading, cybersecurity and emerging technologies, and environmental fraud. After this reorganization, the CFTC streamlined the number of law enforcement working groups from multiple to two, namely the Complex Fraud Working Group and the Retail Fraud and General Law Enforcement Working Group.
Among them, the Complex Fraud Working Group will be responsible for handling complex fraud and market manipulation cases involving all asset classes, covering the entire process from investigation to litigation. The Retail Fraud and General Enforcement Working Group focuses on combating retail market fraud and other general enforcement matters.
Acting Chairman Pham pointed out in a statement that the adjustment aims to stop “Regulation by Enforcement” and improve the efficiency of agency operations, allowing the CFTC to more accurately crack down on market fraud and misconduct, rather than impose excessive compliance burdens. The CFTC announcement further emphasized that the new structure will more effectively prevent fraud, manipulation and market abuse, ensure market fairness, and at the same time strengthen supervision and governance of law enforcement actions, prevent supervision from exceeding authority, and improve law enforcement consistency and compliance with due process standards.
Why is this statement important? The first thing to know is that the CFTC has participated in cases such as Binance and Coinbase, and is one of the more active U.S. crypto regulators. Because of the commodity nature of cryptocurrencies (such as being used as a gas fee), the CFTC believes that the crypto industry should probably be placed under its supervision. At the same time, law enforcement supervision was a common strategy used by the SEC before, that is,”You can play whatever you want, but if something goes wrong, you will be punished” strategy that can be done without any prohibition.
However, this strategy often does not provide any regulatory clarity: A typical example is Coinbase, which was quickly approved by the SEC when Coinbase was initially IPO and did not provide any definition of cryptocurrencies, but a few years later, Coinbase was sued on the grounds that cryptocurrency was an unregistered security, and Coinbase provided a trading platform for unregistered securities. This capricious regulatory attitude has brought great uncertainty to the U.S. crypto industry, which is why the CFTC’s clear statement of banning law enforcement supervision is a huge benefit for the crypto industry.
David Sacks: What the new crypto czar is doing
David Sacks, as the White House’s head of cryptocurrency and AI affairs, emphasized at a recent press conference the promotion of the United States as a leader in digital assets and called for the establishment of a clear regulatory framework as soon as possible. He announced that the Senate and House will work together to develop cryptocurrency legislation to address long-standing uncertainties faced by the industry. Senator Bill Hagerty introduced the GENIUS stablecoin bill, hoping to provide legal support for this market by regulating the stablecoin issuance procedures. Sacks believes that stablecoins can not only consolidate the US dollar’s dominant position in the international market, but may also bring in trillions of dollars in demand for US Treasury bonds, thereby lowering long-term interest rates and enhancing the stability of the US financial system.
At the press conference, Senator Tim Scott, Chairman of the Senate Banking Committee, proposed the goal of getting the stablecoin and digital assets bills through Congress and sent to the president for signature within 100 days. Congressman French Hill, chairman of the House Financial Services Committee, said the new version of the Digital Assets Bill will be revised based on FIT 21 to address previous loopholes, such as the practical feasibility of the SEC classifying tokens within 60 days. The Senate also plans to coordinate FIT 21 to ensure that the version of the bill can eventually be signed into law by the president.
According to CNBC reports and interviews, Sacks also particularly emphasized the negative impact of de-banking on the crypto industry. He pointed out that keeping cryptocurrency-related businesses in the United States would be more conducive to consumer protection because regulators can more effectively monitor market activities when these companies are located in the United States. He believes that regulatory loopholes in Bahamas led to the world’s largest crypto fraud case (referred to as FTX), and that the United States should avoid repeating the same mistake.
David Sacks (first right) stands with senators and representatives during his first press conference. Source: Bloomberg
Sacks confirmed that the Bitcoin Reserve will be included in the White House Digital Assets Working Group’s research agenda and may contain seized assets. However, he said that the concept of a sovereign wealth fund is different from Bitcoin reserves, and that specific policies will be the responsibility of incoming Treasury Secretary Howard Lutnick. The Trump administration is exploring Bitcoin’s potential role in the national fiscal system, but specific options are still under discussion.
David Sacks expressed the attitude of U.S. regulation in one sentence: “The crypto war is over. I look forward to working with you to jointly create a golden age for digital assets.”
