JP Morgan Chase, one of the largest investment banks around the world, seems to have closed the account of a crypto startup without an explanation.
Cryptoraves, a firm that aims at tokenizing social media, has received a notification from the bank explaining that they have decided to close their account.
JP Morgan Chase Closes Cryptoraves Bank Account
The cryptocurrency startup Cryptoraves has received a letter from JP Morgan Chase explaining that they have decided to close their account. The information was released by the startup in a blog post on March 13.
According to Bryan Plasters, the technical strategy and operations lead for Cryptoraves, explained that they had 15 years of personal business relations with Chase bank and with a lot of cryptocurrency-related activity in the last few years. As he mentioned, they decided to open a business account on their bank because they were very happy with the services offered.
In order to open this bank account, they applied for them in person with branch representatives that assured them that everything looked fine.
They said that they were using the account to pay for fees, contractors and web hosting. Plasters says that they have also performed a transaction to Gemini so as to purchase ETH and LOOM and cover future blockchain fees, and they believed that these transactions flagged their account.
After this situation, they decided to go to the local branch because by phone they did not want to provide any further details regarding the situation. At the branch, the agent answered that the firm was operating in a “prohibited industry.” About it, Bryan Plasters commented:
“So we are very confused and frustrated, especially since they wouldn’t tell us the reason why we were shut down. We are uncertain where to turn now as we still need normal banking services. Does anyone know of a bank that is considerate of legitimate blockchain businesses.”
Cryptoraves is a token that the firm created in order to increase credibility on social media. The tokens can be requested for free to be sent to other users in the popular social network. However, these tokens do not have actual value.
The account shut down comes just a day after JP Morgan launched the so-called JPM Coin. This stablecoin is a solution that aims at making it easier for customers to send and receive payments.
In a recent report released by Bloomberg, Sam Bankman-Fried, commented about it:
“It’s not illegal for big banks to bank the crypto industry, but it’s a massive compliance headache that they do not want to put the resources in to solve.”
There are many companies around the world that are facing similar problems. Crypto startups and larger companies have to deal with banking institutions that do not want to provide services to compliant clients.