Jack Mallers Got Debanked. You Could Be Next.

Jack Mallers, media personality and founder of the popular bitcoin app Strike, disclosed this week that he was debanked by JP Morgan. Mallers shared his experience on X, stating that "it was bizarre. My dad has been a private client there for 30+ years. Every time I asked them why, they said the same thing: 'We aren’t allowed to tell you'."

The former Twitter-sphere has been quick to blame Maller's debanking on "Operation Chokepoint 2.0," referring to a series of articles published in the news outlet Pirate Wires that alleged that the Biden administration intentionally debanked companies involved in the cryptocurrency industry.

But that's not all there is to the story.

Bro How The Fuck Does Debanking Work Bro

On Sunday, a clip showing Mallers calling JP Morgan CEO Jamie Dimon "Jeffrey Epstein's banker" on Yahoo Finance resurfaced on social media, quickly gaining viral attention. But the clip was originally aired in January 2024, and it's not the only time Mallers criticized Dimon for the bank's ties with the convicted sex offender.

In light of recent disclosures forced by the New York Times and the Wall Street Journal in the US Virgin Island's lawsuit against JP Morgan, which accused the financial institution of having knowingly facilitated, sustained, and concealed the human trafficking network operated by Jeffrey Epstein, the bank is facing a massive public relations crisis, and a potential criminal investigation: as Senator Ron Wyden alleges, JP Morgan failed to report over $1 Billion in suspicious transactions from Epstein's accounts.

Under federal regulations, banks are required to evaluate their customers based on anti-money laundering (AML) and counter-terrorist financing (CTF) risks. Traditionally, these processes take into account things like federal investigations, criminal convictions, or personal ties to individuals and entities accused of a crime. For example, if your spouse were to be sanctioned by OFAC, it is likely that a financial institution would debank you too. To determine such ties, AML/CFT frameworks mainly scan for media reports and public documentation involving their clients.

But recently, AML/CFT frameworks have gotten an upgrade. The Wolfsberg Group, a consortium of the world's largest banks that includes JP Morgan has been lobbying for something called a "True Risk-Based Approach" to financial crime.

The proposed approach includes the incorporation of "dynamic behavioural customer information" such as "data from reputable external, publicly available sources", like "verified customer social media accounts", allowing financial institutions to create a more comprehensive "customer behavior analysis" and a more efficient "network-based contextual view of a customer" that uses machine learning to "be used as the primary detection tool itself".

In short, when JP Morgan routinely assesses whether Jack Mallers poses a AML/CFT risk as a client, such a software is likely to flag Mallers calling Dimon "Jeffrey Epstein's banker." It should also be fairly safe to say that Jamie Dimon probably does not enjoy banking someone who calls him that. The things is: we will likely never find out why Mallers was debanked.

The way that AML/CFT laws are structured give banks complete and total deniability over whether a client was debanked due to a personal feud, an unfavorable political opinion, or an actual AML/CFT risk. Disclosing an AML/CFT investigation to the client is a federal crime, and even when clients attempt to sue over being debanked, these reports commonly remain classified.

The use of AML/CFT frameworks to oppress dissent is well known. In 2024, the UK's Royal United Services Institute (RUSI) issued a 45 page report on the weaponization of FATF standards and its influence on the repression of watchdog organizations, journalists, critics and opposition groups - including a guide for affected entities.

But instead of focusing on the actual issue – namely the drastic reform of global AML/CFT – prominent individuals in the cryptocurrency- and tech industry are attempting to cut out exceptions for themselves. Jack Maller's debanking shows: it doesn't work that way.

The Operation Chokepoint 2.0 Smokescreen

Operation Chokepoint 2.0, penned by Venture Capitalist Nic Carter for Pirate Wires, began with an important observation: systemically, people who operated cryptocurrency businesses had trouble getting bank accounts.

But the issue Carter identified, in part together with Pirate Wires Editor in Chief Mic Solana, who also serves marketing director for Peter Thiel's Founders Fund, was not that the AML/CFT regime is a majorly flawed approach at financial risk management that enables politically motivated debanking.

Rather, the two pinned cryptocurrency debanking entirely on the Biden administration, and, together with a16z's Marc Andreessen, on the Consumer Financial Protection Bureau (CFPB) – seemingly hoping that if only there were a Commander in Chief at the helm of Government that was favorable to their industry, cryptocurrency debanking would be a thing of the past.

The authors wholly ignore that engaging with cryptocurrency and banks has never been exactly easy, and seem ardent on finding another boogeyman to blame than addressing the actual issue at hand.

Instead, the entire conversation around debanking within the cryptocurrency industry has been an attempt to carve out an exception for cryptocurrency businesses within the AML/CFT regime, while a factual debate around the issues of AML/CFT continues to be virtually non-existent, confined to a small niche of policy experts.

Revising AML/CTF would not just require admitting to one of the largest policy failures in history. It would create a major problem for investors like Thiel and Andreessen, as both are widely invested in KYC/AML/CTF software.

Thiel's Palantir was founded out of PayPal's anti-fraud algorithm, and Palantir's Foundry continues to be one of its largest platforms sold to banks for AML/CTF. a16z dedicates an entire investment sector to the advancements of AI in banking compliance – using automated systems which coincidentally have much likeness to the Wolfsberg Group's True Risk proposal.

Addressing the actual issues inherent to AML/KYC for the main propagators of Operation Chokepoint 2.0 would strictly be bad for business.

So despite Trump issuing an Executive Order to stop debanking, and the Federal Reserve Board announcing that reputational risk will no longer be a component of examination programs in its supervision of banks, the debanking continues...

For the simple reason that banks continue to be liable to federal regulations – such as the Bank Secrecy Act – that put the mechanisms for politically motivated debanking in place, which in turn continue to make those driving the cryptocurrency debanking discussion a lot of money.

They just don't want to be debanked themselves.

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