Bank account frozen, cryptocurrency has become my "lifeline"

Written by: Boaz Sobrado

Translated by: Chopper, Foresight News

March 25, 2021, a JPMorgan Chase branch in New York, USA

On December 19, about four weeks after I arrived in the United States and opened a Chase bank account, a bank email suddenly appeared in my inbox. The notification was cold and impersonal, just a standard template: “This is to inform you that our bank has decided to close your account.”

The bank provided no explanation, only a list of instructions: destroy your debit card, cancel automatic payment agreements, update electronic wallet information, and wait for written notice. The letter claimed that subsequent correspondence would provide full details. But until now, I have yet to receive any explanatory letter.

My account held several thousand dollars, with various bills set for automatic deduction. I had just relocated abroad, and Christmas was just around the corner.

I was not the only one facing such frustrating experiences. In November of the same year, Jack Mallers, CEO of Bitcoin payment company Strike, also suffered a similar painful ordeal. JPMorgan Chase suddenly closed his personal and business accounts, citing “suspicious transaction activity” as a vague reason. Even more shocking was that Mallers’ father had been a private banking client of the bank for many years.

Coincidentally, Russian lawyer Anya Chekhovich, working at Alexei Navalny’s Anti-Corruption Foundation, also had her bank account frozen without mercy after the Russian government designated the foundation as an “extremist organization.” Although JPMorgan Chase ultimately withdrew the account closure decision amid strong public condemnation, the damage was already done and difficult to undo. The wording of these account closure notices was eerily similar, sending chills down one’s spine.

JPMorgan Chase is not an isolated case. In December, preliminary investigations by the U.S. Office of the Comptroller of the Currency revealed that between 2020 and 2023, nine major banks (JPMorgan Chase, Bank of America, Citibank, Wells Fargo, U.S. Bank, First Capital Bank, PNC Bank, TD Bank, and Montreal Bank) exhibited systemic account closure behaviors. The targeted entities included cryptocurrency companies, arms dealers, oil and gas firms, and various political groups.

The Trump administration has made this issue a key focus. In August, Trump publicly stated that JPMorgan Chase and Bank of America had refused to accept deposits exceeding $1 billion, which directly prompted him to issue an executive order instructing regulators to investigate such “politically motivated or potentially illegal account closures.”

Most media reports overlook a critical point: the essence of this incident is far more complex than a simple political or ideological struggle.

The Mechanism Behind the Account Closure Wave

Patrick McKenzie, a senior payment industry expert, provided an answer in his influential paper “Viewing the Problem from a Banking Perspective.” He sharply pointed out the systemic shortcomings of banks: they are very good at tracking ledgers, confirming fund ownership and flow, but beyond that, they lack the capacity to effectively monitor other types of information.

The root of the problem lies in the underlying system architecture of banks. Core banking systems must interface with numerous subsystems, creating multiple points of data transmission failure. For example, the decision to close an account might be generated in system A, archived in system B, and notifications sent through system C. When you contact customer service, the staff you speak with has no access to any of these systems.

To control costs, banks adopt a tiered customer service system. First-line support can only recite scripted responses; second-line support has slightly higher permissions; and the truly knowledgeable third-tier specialists, who can explain the reasons behind issues, rarely handle incoming calls. This tiered model is an inevitable consequence of the low-profit nature of retail banking. It allows a high school student to open a checking account easily, but also means that accounts can inexplicably vanish due to system errors.

Meanwhile, banks also face strict regulatory requirements. In many cases, they must submit “Suspicious Activity Reports” (SARs), including for international wire transfers, clients with multiple nationalities, and other risk factors. Ironically, sometimes just knowing that a SAR exists can trigger the bank’s reporting mechanisms.

According to U.S. federal regulation 12 CFR § 21.11, if a bank has already filed such a report regarding a customer, it is legally prohibited from informing the customer about it. The law mandates confidentiality, so banks cannot provide any explanation.

A Typical Personal Experience

When JPMorgan Chase sent that stiffly worded account closure notice without explanation, they might have been acting within the law, or perhaps based on algorithmic risk assessments. While this assessment may seem reasonable in algorithmic logic, it sounds absurd in plain language. Customers with multiple nationalities, overseas backgrounds, and modest account balances are considered high-risk by banks. I happen to fit this high-risk profile perfectly.

This tiered customer service system also has special channels for VIPs such as prominent human rights activists and regulatory personnel, who can directly connect with empowered technical support teams. Ordinary customers, however, are left to navigate endless menus via voice prompts. Naturally, I was too lazy to keep calling for inquiries.

For me, having my account frozen and being unable to access funds for weeks was just a minor inconvenience. But for those already struggling to make ends meet, it’s an unshakable nightmare. Banks are meant to serve the masses, a societal necessity. However, the high costs of covering everyone have ultimately led to a system that is extremely unfriendly to “outliers.” When inclusive finance becomes the norm, the number of such “outlier” customers is actually far greater than imagined.

Cryptocurrency: An Alternative to the Banking System?

When I received that account closure email on December 19, my thoughts weren’t about Federal Reserve policies or decentralization debates, but about the tangible advantages of cryptocurrencies. I stored several thousand USDC stablecoins in a self-custody wallet, which I can access at any time: no need to press buttons repeatedly in voice menus, no waiting for checks to arrive, and no worries about when I can get my money back.

For immigrants, foreigners, and globally mobile professionals, traditional banks often see their complex identities as risks. Multinational backgrounds mean multiple compliance checks, triggering risk alerts, and algorithms may deem them “too troublesome to accept.”

Stablecoins were originally designed to provide a dollar-denominated value medium for such people. They can circulate freely across borders, and these features are considered “risk signals” by traditional banks. As a result, stablecoins have become an ideal solution for these needs.

The Trump administration’s high-profile focus on “illegal account closures” may inadvertently accelerate the adoption of cryptocurrencies. When influential crypto executives like Mallers face account closures, it draws more attention to the issue. But the core driver behind large-scale crypto adoption isn’t political factors; it’s the terrible experience ordinary people have within the traditional banking system.

I am still waiting for JPMorgan Chase’s explanatory letter, hoping it will clarify the situation. But most likely, it will be just like that vague email—citing company policies and procedures that sound reasonable on paper but are arbitrary and unfair when applied to specific individuals.

Banks are not malicious; they are just institutions that have fallen behind the times, trying to use outdated systems to manage the complex financial ecosystem. These systems often generate false risk alerts, and sometimes, that alert hits right on someone just before Christmas.