The following article is a supplement to the MRC Report: The Biden Administration Waged War on Free Speech with 57 Censorship Initiatives.
Crypto was a victim of Biden’s censorship crusade.
Blockchain-based speech offers exciting opportunities for new communication networks. President Joe Biden’s Securities & Exchange Commission (SEC), under Chair Gary Gensler, led a coordinated and whole-of-society approach to censor blockchain-based communication — while pushing America toward a social credit system via central bank digital currency (CBDC).
- Targeting Blockchain-Based Speech
Prior to his appointment by Biden, Gensler had acknowledged that blockchain-based speech, such as crypto tokens, were “non securities” — instead, each token was a “commodity.” However, as SEC chair, he sought to control this avenue of communication by instead labeling them “securities.”
Instead of trying to expand the meaning of the word “securities” via rulemaking under the Administrative Procedures Act (APA), Gensler’s SEC brought enforcement actions against institutions trading independent crypto tokens.
One of the first institutions targeted was Digital Licensing Inc., better known as “DEBT Box.” The SEC alleged that DEBT Box was “defrauding thousands of investors of at least $49 million” and individually charged the company’s leadership and affiliates. The SEC also demanded the court seize DEBT Box’s assets and put the company in the control of a court-ordered receiver — thereby banning DEBT Box’s staff from accessing their own blockchain communications.
A federal court later found that the actions against DEBT Box were “marred by false statements and misrepresentations” and the SEC had engaged in a “gross misuse of power,” as reported by The Block and The Salt Lake Tribune. By the time the deception was discovered, though, Debt Box had already incurred at least $1.8 million in legal fees alone — a number that did not account for the damage in value to the company from the SEC’s false accusations.
Another blockchain-based organization the SEC targeted was “Ripple,” which offers the crypto token XRP. Gensler’s SEC charged Ripple and its founder, Brad Garlinghouse, with selling an unlicensed security. The SEC action attempted to compel Ripple to rescind access to the XRP blockchain— effectively making the code, a form of speech, “illegal.”
As with Debt Box, the court determined the SEC’s case was spurious. Nevertheless, the case took years to be resolved, risking XRP’s value entirely (and Ripple’s financial solvency) before the trial even happened — and a strong deterrent for other firms considering entering the blockchain business. It also enabled Gensler to avoid the entire APA-required notice-and-comment period, which would have raised the censorship risk in allowing the SEC to declare code something it had power to control (and bar) the exchange of. The action also had the added harm of moving litigation on this question into the Second Circuit, which is significantly more leftist than the DC Circuit which would have handled the APA claims.
A third target of Gensler was the firm Andreessen Horowitz, generally transcribed as a16z. A16z cofounder Marc Andreessen detailed years of SEC harassment, where the agency raised the spectre of prosecution to “debank” his company and staff.
According to Andreessen, the SEC’s weapon of choice was a “Wells notice,” which implied a forthcoming prosecution so as to scare banks from investing. Andreessen also identified the Consumer Financial Protection Bureau as joining in the targeting, even debanking his business partner’s father, David Horowitz by tagging him as a “politically exposed person” for being “pro-Trump.”
- Favoring a Social Credit System
FTX was a massive financial institution run by Democrat megadonor Sam Bankman-Fried. Bankman-Fried was a vocal supporter of “effective altruism,” a philosophy which holds that large corporations should act as an “economic enforcement tool” for public policy change.
In an interview with blockchain-focused outlet The Pavlovich Today, Bankman-Fried endorsed the White House’s policies towards cryptocurrency, including its strategy to research a central bank digital currency (CBDC). As reported by Fox News, Bankman-Fried met personally with Biden and had “full access” to the Biden White House regarding — in the White House Press Secretary’s own words — “cryptocurrencies and crypto exchanges.”
As detailed by The Wall Street Journal, FTX-tied Silicon Valley Bank was warmly received by Biden administration regulators, including Gensler’s SEC, which did little to investigate what was then the paragon of environment, social, and governance (ESG) standards. A report by The Information recorded FTXs monicker as the “‘central bank’ of crypto” — unsurprising, as FTX backed the nation’s second-largest crypto exchange. This success was not organic: as detailed above, the Biden administration was targeting FTX’s more free market, CBDC-hostile competitors.
However, ESG was not as profitable as FTX proclaimed to the public. Bankman-Fried and his executives were committing fraud on a truly massive, $8 billion scale to hide their less-than-ideal finances. When this fraud was discovered, FTX collapse, taking down the institution Silicon Valley Bank. Despite not being insured by the Federal Deposit Insurance Corporation (FDIC), Secretary of the Treasury Janet Yellen — with the support of the Federal Reserve System (“the Fed”) — approved the agency’s plan to bail out the bank with fees collected from competitors the SEC targeted.
As a result, ESG policies were shielded from the economic consequences, and the SEC did not have to answer for sabotaging all crypto trading that wasn’t run through the so-called “central bank of crypto.”
- Using SVB’s Collapse to Further Target Blockchain
The collapse of SVB should have been a wake-up call to Gensler’s censorship cartel on the inherent risks in favoring ESG-based blockchain concerns. Instead, it was used as the pretext for sabotaging even more crypto firms.
In early 2023, the Office of the Comptroller of the Currency (OCC), which was controlled by Yellen, issued a joint statement with the FDIC lambasting crypto and declaring “[i]t is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system.” Shortly thereafter, Gensler told New York Magazine that “everything [blockchain] other than Bitcoin” was a security.
Just weeks later, SVB ultimately imploded, triggering a run on various financial institutions. Two of the affected banks were Silvergate Bank and Signature Bank, each of which financed independent crypto. Though the run was then seemingly “stabilized,” according to CNBC, the FDIC took the opportunity to subsidize Silvergate’s decision to “voluntarily liquidate” its assets. The FDIC then seized control of Silvergate, and — alongside New York regulators — shut it down.
Former Congressman Barney Frank, who sat on Signature’s board, laid the blame at the feet of President Joe Biden’s regulators. Frank added: ““[W]hat happened was that regulators wanted to send a very strong anti-crypto message. We became the poster boy because there was no insolvency based on the fundamentals.”
Gensler seemingly acknowledged this, remarking: “Silvergate and Signature [Banks] were engaged in the crypto business — I mean, some would say that they were crypto banks.”
Conclusion
Gensler and the Biden administration waged lawfare to silence independent, blockchain-based speech. At the same time, they rigged the market to favor crooked financiers who used crypto as an “economic enforcement tool” to impose conformity and crush dissent.
Conservatives are under attack! Contact your representatives and state prosecutors and demand they investigate the censorship actions of Gary Gensler’s SEC. If you have been censored, contact us using CensorTrack’s contact form, and help us hold government and Big Tech accountable.
