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Debanking (and Debunking?)

• TwoNineFive 2y ago
  The right-wing false-victimhood ragebait narrative of the "Debanking" non-scandal is the story. It's ragebait propaganda and has no place on HN.
  • bayarearefugee 2y ago
    People whose business is effectively a grift should not be offered banking services, both as a moral issue and as a good business decision. Right-wingers are far more likely to be grifters. So right-wingers are more likely to be debanked but correlation is not...yadda yadda. The tech industry was a lot cooler back when it was mostly graybeard hippies and not a bunch of incel adjacent techbros who never grew out of their Ayn Rand idolization phase.
  • ranger207 2y ago
    Debanking is part of the culture war now, which means that someone's reaction to it shows that they're either on the right or on the left, with no positions in between allowed, and that therefore they also support all the other culture war positions of their chosen side. The culture war is designed to bundle positions together like this, and to force issues into the bundle, in order to foster an us-versus-them feeling about every issue. It's possible to recognize this is happening, attempt to analyze the issue and the merits of each side of the argument, and come to a conclusion that one side or the other has the better argument. It's difficult though to convince others that your position is not because of culture war dynamics because the design of the culture war is to minimize independent analysis. I think that debanking is absolutely a right wing false victimhood propaganda narrative, but I'm still interested in why they think it's an issue, partly in order to engage in the argument and defeat it based on facts, and partly to continue to learn the foundations for their side of the culture war in general
    • ConspiracyFact 2y ago
      >The culture war is designed to bundle positions together like this Designed by whom? Do you have evidence?
• EVa5I7bHFq9mnYK 2y ago
  [flagged]
  • tarxvf 2y ago
    Bad summary.
  • deleted 2y ago
    [deleted]
• rosmax_1337 2y ago
  >This is not the world you live in. [A world where people get debanked for political reasons.] I know quite a few people, and entities affected by it in Europe. Some of them even personally, individual accounts, not just their companies and organizations. I would elaborate, except I suspect that will be counter productive. Please read site guidelines. Let's agree to disagree. The idea that the debanking of individuals on political basis has only happened in Canada is wrong. Furthermore, this also only happens to, let's say one side of the political dialogue.
  • do_not_redeem 2y ago
    That blog has a lot of choice quotes along the same lines. Another favorite: https://www.bitsaboutmoney.com/archive/money-laundering-and-aml-compliance/ https://www.bitsaboutmoney.com/archive/money-laundering-and-... > This [KYC/AML] will affect the typical user of the financial system precisely zero times during their lives. I've been affected by this nonsense, and so have friends and family. Quite inconvenient when you're trying to buy a house and trying to keep things moving on time. I may not be "typical" but my mother certainly is. I can tell that patio11 is highly invested in the finance industry, not wanting to burn bridges, and I think he is incentivized to try to make people believe that KYC is beneficial and highly effective, but it's just not the case. It reminds me of the people inside Google working on their auto-banning systems who won't admit that it doesn't always work perfectly.
    • otterley 2y ago
      Per the article: "Debanking will also not infrequently swiftly cascade to accounts in the same household, regardless of title (non-specialists can round this to “name on the account”; industry can’t). Banks institutionally consider those accounts in the same household to be highly likely to be under common control, regardless of what paperwork, account holders, or politically influential subcultures believe."
      • do_not_redeem 2y ago
        My parents live 1000 miles away and we haven't been in the same household for 20 years. Either our troubles were independent and uncorrelated events, or banks are crawling through people's family trees like they're 23andMe. Maybe my cousin who I haven't seen since we were kids did something shady and tainted our whole family tree in the eyes of the banks, who knows anymore.
• porridgeraisin 2y ago
  Jeez, had the article been any more drawn out we could have connected them to a publisher.
• SuperNinKenDo 2y ago
  This is a very strange read. My initial feeling was that it was an awful lot of verbal gesticulation aimed at simple gaslighting. Having read most of it at this point it almost reads like it's trying to confirm the hypothesis while saying it's doing the opposite. I really dunno what to make of the piece, but it's kind of an exhausting read.
  • ls612 2y ago
    I think you are exactly right. patio11 both wants to communicate a point and also understands that communicating certain points can lead to really bad outcomes for you and your family. Thus he often writes that way about topics where powerful individuals might wish to harm him for his opinions. Such is the way the world really works, regardless of whatever naive people were taught in school about freedom of expression. “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”
    • walterbell 2y ago
      We need a good name for this style of writing.
      • ls612 2y ago
        samizdat
        • walterbell 2y ago
          perhaps, patiotic :)
      • do_not_redeem 2y ago
        Sounds like this: https://en.wikipedia.org/wiki/Aesopian_language https://en.wikipedia.org/wiki/Aesopian_language
        • walterbell 2y ago
• makeitdouble 2y ago
  I'm not sure I got the gist of it right, but not willing to go a second time. This was specifically about banks and their regulation, and I think it misses the more vague and less accurate sense that financial institutions can remove players and customers from the market basically at will, which would be the reason given by people going to crypto IMHO. To his point it doesn't fit "debanking", but if tomorrow VISA and Mastercard decide your online business is stinky, holding a bank account won't help you in any useful way. That's basically what happened with Porn, where even if you had a very tightly managed and stricly lawful business (let's say you produce clay stop motion porn movies), you'd still be kicked off payment platforms. Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
  • dalemhurley 2y ago
    You missed the point, banks have costs, banks are companies, banks must be profitable otherwise they collapse, crypto is very expensive to bank, banks have difficulty making profits on funds sourced from crypto, a responsible business you must prioritise (queens English) profitable customers.
    • makeitdouble 2y ago
      My understanding is that crypto is expensive to banks because crypto is expensive to any legal entity in general. And crypto kings not being able to hold their coins in their bank account doesn't sound like "debanking" to me, because it never was banked in the first place (some banks sure did handle it, but not the ones they're crying about). I also can't get my bank to hold my beany babies either, and nobody calls that being debanked.
      • lmz 2y ago
        It's not about storing crypto - it's about storing fiat currency for crypto companies.
• olalonde 2y ago
  I don’t think anything was truly debunked here. Debanking is indeed a side-effect of AML laws and regulators, but as the article highlights, these laws are largely ineffective at stopping actual money launderers. Meanwhile, the vast majority of debanked customers are innocent. AML laws should be repealed entirely. Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
  • nyclounge 2y ago
    >Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner." Think there have being big pressure from banks and financial institutions to centralize power. AML laws seems just a way for the regulators to do it.
    • walterbell 2y ago
      > pressure .. to centralize power Social law and order rests upon consent of the governed. Social contracts are abrogated when legal power is hijacked. Indirection of motive via narrative, math or physics is not consent.
    • tadfisher 2y ago
      Banks and financial institutions see AML as a necessary cost center to continue operating as a business. They would gladly fire 90% of their compliance department if they didn't have to write hourly memos to FinCEN and join conference calls with the Fed. Power and money correlate, but money is ultimately what does the talking.
  • vishnugupta 2y ago
    I didn't read the article but I do agree with you completely. I've noticed this repeatedly where if I've to move a small sum of money in/out of my country I need to fill 20 letters and 50 if it's a business. But if I have to move say $100MM? Banks will roll out a red carpet, no questions asked. If it's left to the banks they are all too happy to serve anyone with money, we have quite a few examples[1] of that. Regulators want banks make examples of anyone which banks do by harassing small businesses which won't have monetary impact to banks' bottomline. My gut feeling is even regulators don't care much, they just want to pretend to the voters that they are trying to do something, anything. [1] https://www.icij.org/investigations/fincen-files/hsbc-moved-vast-sums-of-dirty-money-after-paying-record-laundering-fine/ https://www.icij.org/investigations/fincen-files/hsbc-moved-... [1] https://en.wikipedia.org/wiki/World_Jewish_Congress_lawsuit_against_Swiss_banks https://en.wikipedia.org/wiki/World_Jewish_Congress_lawsuit_...
• typeofhuman 2y ago
  [flagged]
  • wmf 2y ago
    I assume Kayne found another bank, just like patio11 did after he got debanked. Those stories aren't that interesting. The juicy cases are when no bank will deal with someone.
• roenxi 2y ago
  > ... [debanking] often gets conflated with declining to open an account for a person or a business ... A reasonable perspective. But the obvious follow up is what one pithy word should be used to describe this activity? The proffered terms (offboarding, derisking) are being suggested by the industry with an obvious political motive to minimise the significance of what they are doing. There is an ongoing war against the pornography industry that has been waged in part through payment processing. The entire thing is an intense mish-mash of poverty, wealth, politics, drama, technology and major social forces clashing with each other. It isn't appropriate to talk about that sort of action in bland terms. There is an attempt being made to sculpt society by leveraging the financial system. The implementation details of that isn't "offboarding" or "derisking" - it is much more in the spirit of a word like "debanking". I'm with the activists on this one. It makes more sense to redefine the word debanking to cover politically motivated (or even motivated by business-logic) denial of a bank account. These are not bland administrative decisions.
• blindriver 2y ago
  Bleah this post was overly wordy by 10X and so meandering it was really hard to read. I gave up after 15 mins and realized I was only 1/3 of the way through. My suggestion to the author is to break this up into smaller essays and be more succinct with less meandering.
  • deleted 2y ago
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• declan_roberts 2y ago
  What's the point of this windy article? An allusion to "debanking people is OK actually!" Allowing the bank remove your financial lifeline via some opaque and kafkaesque process where you have zero recourse is not OK and we should not tolerate it.
  • wbl 2y ago
    There are many banks out there that aggressively complete.
    • palmfacehn 2y ago
      This is a valid point. Banks should compete for customers by providing value. They should also be free to decline customers to ensure quality. However, debanking due to perceived or real regulatory risk is ultimately a political act. The banks may not be exclusively political actors, but they are incentivized to act outside of market concerns by state pressure. Similarly, one of the alleged intentions of the cryptocurrency movement was to decouple the state from monetary control.
      • wbl 2y ago
        No it isn't political it's a "you guys are expensive and flighty and killed two banks that served you" decision. VCs pull money out of banks having a hard time while JP Morgan put money in.
    • stainablesteel 2y ago
      there's really only a small number of banks in the US after the 2008 crash, they were all consolidated. what used to be thousands became like 3
      • TeaBrain 2y ago
        At the end of 2023, there were still over 4000 commercial banks in the US. https://banks.data.fdic.gov/explore/historical/?displayFields=STNAME%2CTOTAL%2CBRANCHES%2CNew_Char&selectedEndDate=2023&selectedReport=CBS&selectedStartDate=1934&selectedStates=0&sortField=YEAR&sortOrder=desc https://banks.data.fdic.gov/explore/historical/?displayField...
• Phil_Latio 2y ago
  Another perspective from Europe: In Germany the political climate is so bad that the domestic intelligence publicly confirms on social media that they have person so and so on their radar. This had no consequences. Let that sink in. In such a climate it's sometimes enough to publicly scold a bank on social media to have blogger XY as their customer to trigger debanking. In one case, some blogger called a politician "fat", which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking. So in Germany it's used more Stasi like, meaning protection of the government. They changed the objective so that the scope of the domestic intelligence is no longer groups of people who want to overthrow the system, but also individuals that "deligitimize the government and it's representatives". That is, criticism about the Covid measures can put you on the radar of domestic intelligence. An independent left wing journalist did a FOIA request and found out she's on the radar because of just that. A perfect climate for debanking measures and some hint on what is going on with Germany in case you wonder...
  • the_mitsuhiko 2y ago
    > which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking. I don’t know which person you have in mind but the situation in Europe can’t be directly compared since you have a right to a bank account. You _cannot_ be debanked. You have a right to a “base account” (under some conditions).
    • Phil_Latio 2y ago
      Debanking to me doesn't just mean "no bank account". It starts with closing of accounts without being given a reason and the constant fear that any new account will be closed as well. For businesses this has even bigger implications. You a right: There is base account meant for refugees, homeless people, indebted people... This is nothing more than a safety net for when you are at the bottom of society. You can't do business with it etc... If someone where to be forced to register such an account because all banks closed the normal accounts without giving a reason, I'd still consider it debanked.
• csomar 2y ago
  I am sorry but the OP is writing a lengthy article to legitimize his claim? Here is the point, as I see it and it is very simple: If having a bank account is a requirement to operate legally, a bank can NOT refuse any customer unless they have been barred by a court. It doesn't matter whether you are selling crypto, weed, porn or socks. This is done in France, and many other countries by the way. The bank has an obligation to service, as your life's obligations requires such a bank account. Pat went on a dozens of pages of non-sense to avoid this particular point explaining how the banking system work, the bank obligations and other crap. It's just a bunch of filler non-sense that doesn't address the core point.
  • tptacek 2y ago
    That doesn't make any sense. As the article points out, it's akin to saying that a lender must loan to you unless they've been barred by a court. The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.
    • csomar 2y ago
      Since the Fed is the provider of the liquidity and also sets the rules on what is a collateral and what is not, I say yes, the bank must loan you the money as long as you satisfy the conditions of the loan. The bank is roughly a re-seller of the Fed liquidity. They shouldn't be an arbiter of who gets to access that liquidity but rather an administrative entity that follows the rules.
      • tptacek 2y ago
        That doesn't make sense. When your business account stiffs a bunch of customers who get their ACH transactions reversed, and you're insolvent, your bank has to pay off those transactions. It can't just go to the Fed and say "give me money to cover for this insolvent business". Your bank is not in fact literally just a front end for the Fed.
    • alexey-salmin 2y ago
      No, it's not akin to that. You can live without loans but you can't leave without a debit bank account. As the parent points out there's indeed such a law in France but from personal experience I can tell that it doesn't prevent the bank from closing your account without an explanation (the explanation I was given off-record was my citizenship). The law merely forces the bank to open you an account which can later be closed. So definitely the right direction but IMO not far enough.
• metaphor 2y ago
  Estimated reading time: 134–170 minutes Definitely not a casual Monday evening digest.
• upfrog 2y ago
  For the benefit of people who come to the comments first: If you want a comprehensive debunking or substantiation of the claims about crypto debanking, then this is not the place to go. If you want to read 23,000 words on banking regulation, its uses, abuses, the incentives faced by both the banks and their watchmen, and an explanation for how we ended up where we are, then go ahead and jump into it. Personally, I think the latter is far more useful than the former. I enjoyed it, at least. Bear with me; the free market seems to think that history isn't a very useful area of study, and lots of people agree. At least some of this probably comes from bad experiences with history classes. I like to think of history instruction as having three levels. The lowest level - the one you'll hear people complaining the most about - is presenting history as a dry series of facts. At it's worst, the entire course can be reduced to a hashmap; event -> date. Rinse, repeat. The second layer presents history as a narrative. Most people like stories, so this is much more compelling, and makes it a lot easier to enjoy history. But the highest level of teaching is about systems. It's not enough to colorfully explain that King so-and-so was furious at the offense given by King the-other-one. You have to try to make students understand the world that these two kings existed in; how things as small as calling 9th-century European polities "countries" can disastrously mis-callibrate our models. Once you understand the system that someone is working in, you can hope to understand them, and why they do the things they do. Once you have that, you can hope to pass reasonable judgement on their actions. This article is all about systems and tradeoffs. It is aspiring to that third level. The title is arguably a little bit misleading, but I think it accomplishes it's goal, and personally, I feel like I've come away with a reasonable overall understanding of his thesis, and I think it matches the title.
  • tptacek 2y ago
    I think it's one of his better pieces and in some way a culmination of a lot of things he's been writing about; I think he's counting on people to actually read his previous posts about why e.g. business bank accounts are functionally credit products, not the financial equivalent of water and electric service, and it really helps if you understand some of those details.
  • deleted 2y ago
    [deleted]
• influx 2y ago
  I was debanked by a California bank for selling holsters, a product that is legal nationwide and protected under the Constitution. While the bank has the right to choose its business relationships, it’s concerning to see decisions driven by political positions. This sets a troubling precedent for the direction we might be heading as a country.
  • wbl 2y ago
    I'm sure that the Bakersfield regional credit union would have a different idea about the bankability.
  • stainablesteel 2y ago
    it should have been a central point of the election, it's crazy that this only came out afterwards. we need a basic right to our own banking with due process
• ranger207 2y ago
  I don't feel like the article is particularly in favor of or against debanking in general. (I think in fact that his position as stated is that debanking in general is bad unless it's against people he doesn't like, which is a position held by literally everybody.) Rather, it's an examination of why debanking exists in general and why "bank everyone you're allowed to" isn't the dominant strategy, what factors go into influencing politically-driven debanking, and whether or not the current argument made by cryptocurrency advocates that "we are being debanked for political reasons" is true or not. It concludes that while crypto is being debanked (or equivalently but less provocatively, banks are declining to create new relations with them), it's primarily because crypto has historically been bad for banks. This in turn has created a(n arguably political) culture among those who decide who shall be banked or debanked to not service their industry. In other words, crypto isn't being debanked because people morally disagree with them per se, but because crypto is simply extremely risky tl;dr of the tl;dr: the article is primarily about systems around debanking and only secondarily about whether or not crypto is being debanked (conclusion: it is and it's not necessarily for political reasons)
  • ranger207 2y ago
    The main problem with the article is that, while patio is a very knowledgeable and even insightful writer, he has an extremely indirect writing style. It almost feels like a math textbook that describes "here's the properties of this mathematical construct; you can immediately see it has these properties" without explaining the connection to the other mathematical constructs that give it these properties. In his defense though, his writing is a more gradual progression between "here's a thing" and "here's the implications of the thing" than a typical math textbook. But he still doesn't explicitly point out the connections, which means you have to expend a lot of brain power to hold enough things in your head at once to make those connections yourself, which is exhausting. Part of that is because the connections are social connections that are far less clear, defined, and observable than typical STEM systems, and he doesn't want to ever tell you or imply to you anything incorrect. Contrast this to Matt Levine who will gladly tell you how a social system works in a step-by-step list, followed by how the example he's about to write about completely breaks that system
• lmm 2y ago
  As always, he moves the cup so flashily for so long that you forget that you never saw him put the ball under it in the first place. If you take it as read that Binance (the largest threat to his business interests) really are evil, then of course destroying any bank willing to serve them is perfectly justified. I also love the impersonal gloss over the actions of all the bank employees, as though all the Operation Choke Point crimes were carried out by machines directed by the politicians and regulators, and not humans making the choice to be Quislings. Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made, and note the conspicuous absence of anyone doing the same from the banking/finance industry. Those of us who've been paying attention are not hearing about debanking for the first time now, we've been banging this drum for years. In a country with the US' asset forfeiture laws, denial of banking service is de facto denial of the human right to own property. The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves. (Nor is it that an alternative is impractical. The UK made it legally obligatory for banks to offer "basic bank accounts" to everyone in 2016, and the sky has not fallen). I have no love for the crypto people, but they're fighting for the right thing here (whether they're doing so out of good motives or bad) and I hope they succeed.
  • deleted 2y ago
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  • dalemhurley 2y ago
    So you are saying that a private company, i.e. the bank must service the crypto industry even though it is going to mean they will suffer massive losses in doing so? See my explanation of why it is an extremely costly venture for banks.
    • lmm 2y ago
      My position is that banks (which are not "private companies" as normally understood, but heavily regulated entities whose status already involves a complex bundle of special rights and special obligations) should be obliged to provide basic banking to any legally operating individual or business, just as they are already obliged to offer various services that they probably would not if they had a free choice. If they are unable to figure out a way to provide basic banking without extending credit in the way patio11 describes then this will of course be extremely costly for them, but I suspect they would figure out a way to not have to extend credit rather quickly (hint: look at what banks in virtually any other country do) if they actually tried. If not - i.e. if the current price of banking is only sustainable when banks are permitted to arbitrarily refuse service - then I guess prices will have to rise to something similar to what they are in countries where banks already have those kind of service obligations. Again, that doesn't sound like such a terrible fate.
• deleted 2y ago
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• dalemhurley 2y ago
  I’m one of the few people who can truly say I’ve built a bank from scratch—starting as a single individual in a small office and eventually obtaining a full banking license in one of the most highly regulated financial environments in the world, Australia. I invited Marc Andreessen for a conversation on X (formerly Twitter), after the Joe Rogan interview. It is no surprise I didn’t receive a response when he’s one of the wealthiest and most influential figures in tech, and I’m certainly not even the richest person on my street. At its core, a bank’s business model is straightforward: you act as a caretaker for depositors’ money. Your primary obligation is always to ensure that depositors can withdraw their funds in full, whenever they need them, within the terms of the contract. Profitability is achieved by carefully managing risk—both in holding deposits and lending them out—while making sure that, at all costs, you can make every depositor whole. In practice, this means thoroughly understanding and mitigating risks. To do so means we identify every possible scenario, assess its likelihood and potential impact, plan how we’d mitigate the risk, and determine the residual exposure. Our regulators then review this work, probing relentlessly, testing our assumptions against extreme hypotheticals: floods knocking out our data center, hackers encrypting our backups, simultaneous runs on accounts associated with crypto exchanges—every remote yet plausible crisis is considered. We then refine and repeat this cycle until the regulators are satisfied we understand every angle of our risk profile. Every mitigation strategy we implement has a cost—whether it’s the liquidity we must set aside or the capital reserves we are required to hold. If the regulator believes any exposure is excessive, the bank must increase its capital buffers, making the business more resilient but also more capital-intensive. From a traditional perspective, stable term deposits or mortgages are ideal for banks. They’re long-term, predictable, and well-understood, with minimal servicing costs. In contrast, servicing the crypto industry poses unique challenges. While there can be mutual benefits, the costs and constraints imposed by regulatory and liquidity requirements often clash with the crypto sector’s expectations. Ultimately, it’s a cost/benefit analysis. Crypto-related accounts tend to require holding large liquidity buffers, limiting profitability. Banks must maintain extremely high-quality liquid assets because these crypto accounts can be called upon at any time, as they are generally setup as an on-ramp or off-ramp for the exchanges' customers. If a bank is required to hold 100% of those deposits in liquid form just to meet potential instant demand, the profitability of such relationships diminishes. Once you factor in operational overhead, compliance, and the capital required to ensure depositor safety, the margins shrink even more. Capital adequacy is another critical complication. The bank must have sufficient Tier 1 capital to cover all depositors in the event of a collapse. This includes provisioning for winding up the bank and ensuring depositors remain whole even if certain assets become illiquid. The instability and occasional outright fraud we’ve seen in the crypto domain (e.g., the FTX/SBF scandal) means that funds could vanish or become tied up. As a result, banks often need to raise even more capital or reduce shareholder dividends. This is costly, and that cost must be considered in pricing and strategic decisions. Finally, the operational and compliance costs associated with handling crypto transactions—from specialised staff to advanced monitoring systems—can be prohibitively high. The reality is that the associated liquidity, capital, and operational requirements often make it an expensive proposition with limited upside for the bank. At the end of the day, the bank must always ensure depositors are protected, and that priority imposes constraints that may not align with the crypto industry’s expectations.
• gadders 2y ago
  I think this was his best article yet - it lays out all the various things that have been conflated under "debanking" - some justifiable, some less so. I have no idea where Patio11 sits politically, but as someone who tends right I would say it was a fair description of political debanking (and social media deplatforming), if North America-focussed. And I think it would be fair to characterise Patio11 as a crypto-sceptic.
  • gadders 2y ago
    [flagged]
• efitz 2y ago
  The article’s refusal to acknowledge that there might be viewpoint discrimination going on makes it feel like the author is trying to do a Jedi mind trick.
• sixhobbits 2y ago
  It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about. Until it happens to them. Then suddenly they get quite passionate about the state that the world is currently in. I don't have data on how many people are being debanked, but anecdotally it definitely seems to be some kind of 'line go up' number, and I wonder if cumulatively it will get to some kind of critical mass where we have a large enough percentage of people make enough noise that the laws are reigned in, or if they'll be 'that group of weirdos' forever. (I almost got debanked once -- I had my account re-instated after many weeks of extreme stress https://news.ycombinator.com/item?id=37925678 https://news.ycombinator.com/item?id=37925678)
  • Andrew_nenakhov 2y ago
    A few years ago in Russia, when protesting was still barely legal and possible, prominent opposition leaders were 'fined' for ~1M USD each for damages to businesses what happened due to some protest activity. Banks simply deduced every account balance by -50000000,00 RUB and have a nice day. Whoever thinks that 'but that was bad, evil Putin's government and our nice, good government would never do such a thing' should think again. The government should not have such power at all, neither directly, nor via bank proxy that would 'independently' refuse you service. When you happily cheer that in EU you can't pay with 500 EUR bill (because tax evasion, crime, etc!!!), you are basically helping the government create means to financially strangle anyone the government doesn't like. One day it might strangle you.
    • hgomersall 2y ago
      How could they not have the power? All power the banks have is directly derived from their ability to operate as they do within a currency regime that is directly controlled by the state. Best case is it's your state; plenty operate in a system controlled by a foreign state.
      • Andrew_nenakhov 2y ago
        > How could they not have the power? People in countries that are still free should take it away from them and legally protect direct money transfer between people. Cash, anonymous cryptocurrencies,etc, so that no middleman can ever take someone's money.
• AnAfrican 2y ago
  The PEP part of the Rogan interview was when I understood Andreessen was most likely bullshitting. Funny how this is not clearly stated, most likely because of who Andreessen is.
  • zith 2y ago
    I wonder why Andreessen needs to use disinformation to shape opinion if the actual problem is so bad? I find it very unlikely that he does not know how PEP actually works. It is so demonstrably false. Anyone who has worked in an finance adjacent industry likely knows the definition of a PEP.
    • AnAfrican 2y ago
      Seems to me that he has crypto-related goals but involves more people to gain political support. The OP article's last paragraphs make it quite clear IMO.
  • stainablesteel 2y ago
    what was BS about it specifically? people were in fact getting debanked, outside of crypto too
    • AnAfrican 2y ago
      It is explained in the article. The concept of Politically Exposed Person has nothing to do with views in US politics. It’s really about foreign officials and their families. And, in spirit, it’s really about officials from countries with high corruption risks. And Andreessen knows it. That’s the bullshit.
      • stainablesteel 2y ago
        people were debanked, this is a fact. it was also a viewpoint from the left-wing establishment, spearheaded by elizabeth warren, that crypto should basically be blocked from operating in the us the biden administration was going after their political opponents in many ways (prosecutions of trump and his lawyer, targeting multiple of elon's companies & the delaware courts going after his salary, peter navarro not being allowed executive privilege, eithan heim intimidation and prosecution for whistleblowing trans surgeries on children), this is also a fact whether they used the PEP terminology selectively, or didn't use it at all, is sort of missing the point. there's a political persecution going on the background and the debanking, which was 100% happening and should not be, was done on a purely political basis. the entire process of debanking was basically invented for political reasons so they could debank gun manufacturers. there's nothing non-political about this
• nstj 2y ago
  Why is the linked post so long?
• brilee 2y ago
  His argument seems to boil down to a the financial regulator equivalent of the trolley problem. In Operation Choke Point, the regulators were actively moving the lever to debank morally repentant industries. In "Operation Choke Point 2.0", the complex system of regulatory guidelines and actors seemingly self-coordinates to debank crypto, and the failure of anyone to intercede is painted as a willful neglect. Those on the regulator side say, "I didn't do anything", and those on the crypto side say, "you have every power to do something".
  • cromwellian 2y ago
    Seems to me that what Andreessen was really mad about was the CFPB forcing his portfolio companies that committed consumer fraud to return money to their customers. He also lied about the CFPB doing debanking, they don’t have that power. While debanking may be a problem, there’s a false populism in these disingenuous VCs, pretending that their troubles are the same as everyone else. These guys want to operate in grey areas that enable laundering, illegal gambling, buying/selling contraband, and straight up rug pulls, and not be subject to any risk or oversight.
  • snowwrestler 2y ago
    The point is that Operation Choke Point was an actual operation, but Operation Choke Point 2.0 is not; it’s just a label that someone started using to try to generate sympathy for their private business goals. And a smart reader should recognize the difference and adjust their reaction accordingly.
• bradley13 2y ago
  This bit is downright scary: "the bank cannot explain why SARs [Suspicious activity reports] triggered a debanking, because disclosing the existence of a SAR is illegal. 12 CFR 21.11(k) Yes, it is the law in the United States that a private non-court, in possession of a memo written by a non-intelligence analyst, cannot describe the nature of the non-accusation the memo makes. Nor can it confirm or deny the existence of the memo."
  • metacritic12 2y ago
    Absolutely, it's one of the most undemocratic, potentially violative of 1st amendment laws that is out there. This is from the point of view that money laundering as a law is essentially thoughtcrime. The police state has done an orwellian job of normalizing not privacy, but instead telling the government the reason you are doing every transaction. Then, any attempt to not tell the government is "money laundering". Of course, if you are the state, the powers of this tool are alluring. Imagine if the state could compel citizens to write down what they're thinking, and compel justifications for everything they do in life. Think of how many crimes we could solve! Think of how many bad folks we can catch ahead of time!
    • TacticalCoder 2y ago
      > ...is essentially thoughtcrime > The police state has done an orwellian job... > Then, any attempt to not tell the government is "money laundering". Exactly. But the really most shocking is the number of people that'll find excuses for such a dystopian system. Now of course very few bite the hand that feeds them: when you literally work on software facilitating the handling of SARs, you need to do post-fact rationalization of your acts and life choices. I hope the new administration burns that profoundly nightmarish system to the ground.
  • _fat_santa 2y ago
    I get why this is insane but I also get why the law is there which leaves me in a wired spot. Part of me wants to say something along the lines of "make SAR's disclosable / viewable to American citizens or legitimate users" but you can't really do that because the bad guys will quickly exploit any escape hatches like this. What do others think about this? Because I'm kinda stuck in the middle about them.
• KaiserPro 2y ago
  Debanking isn't unique to the USA either. In the UK, there is no concept of "universal service". if you look dodgy, your bank account can be closed. However unless there is strong evidence of fraud, you should be able to get your assets back, assuming that you can find a bank to take you. But Its more often the most vulnerable that cannot get bank accounts. If you have no fixed address, then you are not able to have a bank account. If you work in stuff that looks like a prude to be sex work, you are also extremely vulnerable. so yes, its great that this might be looked at in the USA, it won't however get reform, because its a very powerful and useful tool for the an administration to pull on when it wants to exert pressure.
  • jdietrich 2y ago
    >In the UK, there is no concept of "universal service". The nine largest banks have a legal duty to provide a bank account to any eligible applicant under Part 4 of the Payment Accounts Regulations 2015, except where providing an account would be unlawful under other legislation (fraud, money laundering and terrorist financing) or where the customer has engaged in harassment against the bank's employees. https://www.legislation.gov.uk/uksi/2015/2038/part/4 https://www.legislation.gov.uk/uksi/2015/2038/part/4 >If you have no fixed address, then you are not able to have a bank account. The above legislation applies to customers with no fixed address. Two banks offer products specifically for customers with no proof of identity and no fixed address. Many others have significant flexibility in their identity and address requirements. https://england.shelter.org.uk/professional_resources/no_fixed_address_bank_accounts https://england.shelter.org.uk/professional_resources/no_fix...
    • KaiserPro 2y ago
      Alas my edit time has ran out, otherwise I would update with your correction. Thank you for correcting me with sources, it is appreciated. The People I know who have no fixed address, told me how difficult it was to get an account. I know when I opened my account recently, I had to provide a whole host of information that wouldn't be possible to have if I was homeless. I made the mistake of projecting incorrect assumptions, confidently. I went full techbro, which is wrong of me.
• motohagiography 2y ago
  What's infuriating to me about this article is that bank "supervision," makes banks a direct proxy for policy via nominally private bodies but without any public accountability. Well regulated banking is a national asset and source of soft power internationally, and having a bunch of anxious de-bankers at the controls is a hollowing out of the common wealth of the society as a whole.
• bilalq 2y ago
  In the Muslim community, we have a phrase for the phenomenon of many of us getting debanked: "Banking while Muslim"[0][1]. LaunchGood was debanked a few years ago and really had to struggle to survive[2][3]. My own startup was threatened to be kicked off Stripe with just 24 hours of notice. It took an exhausting effort and connections with employees inside Stripe to escalate our case to get our case re-reviewed. Google Payments for the Play Store halted payment processing randomly and sent me a message demanding to get copies of my passport and other details. When I sent it, they said they'd respond in 72-96 hours and just came back saying they needed the same document again even after I sent it. This repeated several times. Every time I contacted them, they came back with an automated response saying that they'd look at my message. After I asked for escalation to an account specialist, the specialist said they'd get back to me in 96 hours. That situation also took escalations with friends at Google to get sorted out in the end, but not until we spent two weeks churning subscribers and losing revenue. [0]: https://ispu.org/banking-while-muslim/ https://ispu.org/banking-while-muslim/ [1]: https://twitter.com/search?q=%23bankingwhilemuslim&src=typed_query https://twitter.com/search?q=%23bankingwhilemuslim&src=typed... [2]: https://www.thefp.com/p/debanking-america-melania-barron-trump-january-6-muslims https://www.thefp.com/p/debanking-america-melania-barron-tru... [3]: https://web.archive.org/web/20190430201629/https://tinyletter.com/blauvelt/letters/looking-forward-after-some-of-the-hardest-few-months-of-my-life https://web.archive.org/web/20190430201629/https://tinylette...
• 9cb14c1ec0 2y ago
  Incredibly informative write-up. I consider myself much more banking-industry literate than most, and I learned a lot.
• deleted 2y ago
  [deleted]
• mikece 2y ago
  If you are debanked can you not sue for defamation and slander? After all, only criminals and terrorists get debanked, and if that's happening to me that's a public statement by a public corporation. There is also the problem of punitive action (debanking) upon suspicion of wrong-doing rather than the conviction of it, which is a violation of due process on the side of the government.
  • stainablesteel 2y ago
    andreesen's comments on JRE basically said this: there was no way to sue because the banks were debanking anyone involved in crypto as a "politically exposed person". this was a regulation forced on the banks by the federal government. any bank not following this policy would then be caught under a million internal investigations by the feds, which is excruciatingly painful for them. as such, the banks weren't liable for following procedures, and the feds weren't "responsible" for it as they were very passive aggressive in writing and enforcing rules in such a way that didn't expose them. it wasn't said openly but it was deeply assumed with an undertone meant to circumvent the law. the politically exposed thing had been done prior with gun manufacturers and weed dispensaries so it had some kind of precedence he described it as a puppet with no master above the strings i completely agree that's it's 100% illegal, but there were a number of people who apparently had this same problem yet had no real legal recourse. i don't fully understand it but i assume a bunch of well off founders would have been able to figure it out. their only solution was to apparently support trump because it was so heavily tied to the left wing establishment.
• stainablesteel 2y ago
  It definitely happens for political reasons. Let's be honest here, this is a completely one-sided hunt. And it's the next step in provoking war of retaliation amongst a political populous from an establishment that's losing power. It's disgusting. Anyone should be able to have a political opinion or open a crypto business without needing to worry about the sanctity of their bank accounts. Let's just all agree this is abhorrent behavior and to stop this immediately. It's happening all across the west and it needs to just stop. Political competitions should be fair, not insidious.
  • flyingcircus3 2y ago
    Wouldn't your argument be far more defensible if it wasn't dripping with a siege mentality and provocative, yet unfalsifiable claims? Youre a step away from claiming that the children yearn for the mines.
    • stainablesteel 2y ago
      it happens in europe, canada, and did in the US, so it's not just not unfalsifiable, it's provably true. it's definitely not a siege mentality to say "let's treat each other fairly despite political differences". i don't know what you mean, the rest is nonsense
      • flyingcircus3 2y ago
        It all just sounds similar to claims that Donald Trump was being prosecuted for too many crimes at once, and that's how we can all tell that it's lawfare, and that none of those prosecutions were legitimate, rather than having to reconcile the possibility that Donald Trump is simply a prolific criminal. You'd like us to view this purpose built Ames room from the singular vantage point that presents your side in the best light, rather than the other various angles which reveal a seedier reality.
        • stainablesteel 2y ago
          it doesn't sound similar to any of that, you're just baiting at this point, grow up
• southernplaces7 2y ago
  Given all the rightfully angry comments and descriptions in here about how easily megacorp banks and financial institutions can debank people on a whim with next to zero recourse, one wonders why nothing like some sort of cryptoraphically generated, decentralized token ecosystem doesn't exist by which people can send each other usable monetary value rapidly and via many avenues that are difficult to block... We could call it, crypto... currency, maybe? Wouldn't it be nice of something like this existed, at least as an option for those who don't live in bubbles of never having been the financial rape victims of a large bank, government or formal regulatory algorithmic system.
• FuriouslyAdrift 2y ago
  In the US, there's not a lot (other than a chunk of cash and lots of regulations) to stop a private individual or group from starting their own bank. In the past, large companies and high net worth individuals did just that.
• snowwrestler 2y ago
  The implication that Libra was killed by a letter from 2 U.S. Senators is hilarious. That’s not how businesses make major decisions. A public letter from a couple Senators is not a leading indicator of a regulatory problem. Individual Senators have essentially zero regulatory power whatsoever. It is a trailing indicator of a PR problem. The Hill staffer he quotes is trying to point this out, but Patrick misses it. Perhaps he does not have the personal experience to understand this aspect of what Congress does (unlike the regs he covers earlier in the article, which he clearly has working knowledge of).
• dennis_jeeves2 2y ago
  Why is this article so longwinded? I understand that there are nuances to every subject but does the article it give clear solutions if one is 'debanked'?
• norswap 2y ago
  I used to respect patio11's opinions, and obviously he has a lot of valuable knowledge and there are things to learn from him, but some of his takes on crypto have led me to heavily discount his writings on the topic. On the face of it, this writeup is reasonable. I'm a crypto founder, and I struggle with banking. We've had two banking applications rejected in Singapore. Here's the thing: we're not doing anything remotely like what Patrick describes. I think he strawmans a lot. We're a crypto-focused IT consultancy, but closely affiliated with an upcoming blockchain. The business is set up to be super boring: we bill the client for work and that's it. The company doesn't handle a token, doesn't get revenue from onchain activities, ... The blockchain in question is not anymore risky than any other and in many ways less. Not that the banks know or ass. They just say "you're rejected and we can't tell you why". Now this is Singapore, not the US. It's not a targeted plan but just general policies: "crypto is potentially bothersome for us, let's not bother". In the meantime we don't have a bank account. Though I do believe US attitudes and (lack of) regulation probably impact these policies a fair deal.