Cryptoraves, a crypto startup, is crying foul after its bank, JP Morgan Chase, shut down its account without offering a satisfactory explanation. The bank sent a letter to the startup’s founders on February 15, notifying them that it had decided to shut down their accounts.
The founders came out recently to expose the closure of their account, expressing great disappointment with the bank. According to their Medium post, the founders have held personal accounts with JP Morgan for the past 15 years. In that time, they claim to have received great service.
However, things changed when they decided to open an account for their startup. Since they were clients at JP Morgan, it was the logical option. Everything was sailing smoothly at first. They were “paying contractors, paying for web hosting, legal fees, etc.”
It was when they decided to purchase some Ether and LOOM cryptos from Gemini that the bank flagged them off. The bank representative didn’t confirm this, however. They received the letter a few days later, informing them of their account closure.
Interestingly, the Cryptoraves account was closed on February 15, just a day after the launch of JPM Coin. The coin is the first by a bank in the U.S and will target the bank’s $6 trillion payments business. As such, it is clear that the bank was extensively aware of cryptocurrencies and the laws that pertain to them.
In Cryptoraves case, their tokens have no actual value. They are used to boost one’s credibility on Twitter. The tokens are free, with users sending them as a sign that they endorse a certain tweet. This exempts them from the strict laws that prohibit the extensive involvement of banks with other cryptos such as Bitcoin Core (BTC) and Ethereum.
While still appalling, this is not a unique case. Crypto startups globally struggle to get financial access. Even in countries such as Malta which are very progressive on cryptos, banks are still apprehensive.
A recent report by Bloomberg highlighted just how difficult it is for crypto startups to open a bank account. According to the report, big banks such as JP Morgan and HSBC regards cryptos as “a massive compliance headache that they don’t want to put the resources in to solve.’’
Jesse Powell, the CEO of Kraken crypto exchange explained in a Twitter rant in January that he had to “employ the arts of a money launderer to survive.” This was after JP Morgan and Bank of America closed Kraken’s payroll accounts on short notice.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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