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The U.S. Securities and Exchange Commission (SEC) allegedly pressured decentralized finance (DeFi) platform founders to leave the crypto industry permanently. According to Joey Krug, a partner at Founders Fund, regulators used enforcement actions to force DeFi founders out of the industry under legal threats.
🚨 SEC Used Settlements as a Tool to Eliminate Crypto Founders
According to Joey Krug, former SEC Chair Gary Gensler and his agency used settlements as a form of coercion. Founders under investigation were given a choice: either settle with the SEC or face prison time.
🛑 What Did the SEC Demand from Founders?
🔹 Sign an agreement stating they would never work in crypto again.
🔹 Maintain secrecy – the deal included a non-disparagement clause, meaning they couldn’t talk about it publicly.
🔹 No room for appeal – if a founder refused, they risked criminal charges.
“In many cases, they also had to sign something that said they could never work in crypto again,” Krug said at the ETHDenver conference on February 27.
💰 Operation Chokepoint 2.0: A Coordinated Attack on Crypto?
Krug’s claims fuel concerns about "Operation Chokepoint 2.0," a theory that the Biden administration is systematically trying to kill the crypto industry.
🔹 Regulatory pressure on banks – government agencies allegedly pushed banks to deny services to crypto firms.
🔹 Aggressive law enforcement actions – DeFi founders were threatened with prison unless they accepted SEC’s terms.
🔹 No referrals to the Department of Justice – despite no proof that these founders broke any laws, the SEC still barred them from working in the industry.
“The government went directly to these founders and told them: Either accept this deal, or you’ll end up in jail,” Krug added.

🔒 Crypto Founders Forced to Sign Confidentiality Agreements
Krug initially didn’t believe such settlements existed, but some founders later showed him their SEC agreements.
“Sure enough, there were clauses stating that they could never work in crypto again [and] they couldn’t talk about it with anyone,” he said.
These gag orders are not new. The SEC has included them in settlements since 1972. The so-called "gag rule" prohibits defendants from criticizing the agency's claims, something Commissioner Hester Peirce has criticized as "undermining regulatory integrity."
The only way these DeFi founders can speak publicly about their settlements is if Congress calls them to testify.
🏛️ U.S. Congress Investigates Crypto “Debanking”
In February, the U.S. House of Representatives and Senate held hearings on the “debanking of crypto.” Lawmakers heard testimony from industry leaders about how they faced regulatory pressure and banking restrictions under the Biden administration.
Additionally, the Federal Deposit Insurance Corporation (FDIC) released nearly 800 pages of internal communications, revealing government efforts to pressure banks into limiting or cutting off services to crypto firms.
🔥 The Future of DeFi: Is This Really the End?
The SEC’s crackdown on crypto raises key questions: Is the government trying to destroy DeFi and cryptocurrencies?
🔹 Regulators claim they’re protecting investors, but their actions look more like an attempt to dismantle the crypto industry.
🔹 DeFi founders faced immense pressure, but if Congress steps in, they may finally be able to speak out.
🔹 Crypto VC investors warn that SEC's approach is harming innovation, while countries like Dubai, Hong Kong, and Singapore are welcoming blockchain companies with open arms.
Will crypto in the U.S. remain under regulatory siege, or will we see a shift in policy?
#SEC , #defi , #CryptoNewss , #CryptoRegulation , #biden

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The White House is showing increasing interest in Biden Bitcoin policy and how it can shape the future of cryptocurrency regulation.
The Biden administration is reportedly scheduled to attend a Bitcoin roundtable in early July with several lawmakers, including U.S. Congressman Ro Khanna (D-CA) and billionaire crypto investor Mark Cuban, according to documents obtained by Bitcoin Magazine on May 15.
Ro Khanna, Mark Cuban And More To Attend Meeting On Bitcoin Regulation
The media outlet says it verified an email from the office of Khanna allegedly confirms the meeting, with the Khanna’s office describing it as “the most significant meeting between policymakers and innovation leaders in blockchain to date.”
According to Bitcoin Magazine, the purpose of the meeting is to “keep Bitcoin and blockchain innovation in the United States.”
Both Khanna and Cuban have advocated for regulatory reform across the cryptocurrency sector, with the Californian congressman most recently supporting the Financial Innovation and Technology for the 21st Century Act (FIT21).

“We need blockchain innovation here in America, while also creating regulatory clarity & proper consumer protections,” Khanna said, calling the bill “an important step forward.”
Joe Biden, Donald Trump Differ On Bitcoin As Polls Narrow
Meanwhile, Cuban has echoed similar sentiments, particularly in regards to how current crypto regulations may affect the November 2024 U.S. presidential election.

During Coinbase’s State of Crypto event last week, the “Shark Tank” star claimed that United States Securities and Exchange Commission (SEC) Chair Gary Gensler could “literally cost Joe Biden the election.”
The current U.S. president has often stood in favor of the SEC’s regulation-by-enforcement approach to digital assets, despite Republican frontrunner Donald Trump’s hands-off stance towards the crypto sector.
Most recently, Biden stopped short of vetoing FIT21, a marked shift in tone from his past statements regarding developing blockchain regulations.
“The Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system,” a statement from Biden’s administration following the House of Representatives’ passage of FIT21 said.
Trump, on the other hand, promised to end Biden’s “war on crypto” by ensuring that “the future of Bitcoin will be made in America” in June 14 remarks in West Palm Beach, FL.
Currently, Biden and Trump are virtually tied in election polling, making their each and every stance urgently more critical in the run up to November.
#btc #biden #binance