<\/p>\n
The US Securities and Exchange Commission, under former chair Gary Gensler, used settlements to pressure founders of decentralized finance platforms from ever working in the industry again, according to venture capital firm Founders Fund partner Joey Krug.<\/p>\n
\u201cThe thing people don\u2019t really know about is that the government, in many cases, went to founders of DeFi protocols […] and basically told the founders you effectively have to do a settlement with us,\u201d Krug said on stage at the ETHDenver conference on Feb. 27.<\/p>\n
\u201cIn many cases, they said you also have to sign a thing that says you will never work in crypto again,\u201d he added. \u201cBy the way, this agreement, you can\u2019t really talk about it publicly because there\u2019s a non-disparagement clause.\u201d<\/p>\n
Krug\u2019s claim adds to a crypto industry rumor<\/a> dubbed \u201cOperation Chokepoint 2.0\u201d that says the Biden administration tried to kill the local industry through regulators\u2019 enforcement actions and by pressuring banks<\/a> to cut off or limit services to crypto firms.<\/p>\n \u201cThese agencies would basically go to the founders, and they would say, \u2018Hey, if you don\u2019t agree to this, you\u2019re just going to end up in jail.\u2019\u201d<\/p><\/blockquote>\n Krug said such civil agencies<\/a> would have to defer to the Department of Justice for it to file criminal charges, but \u201cnone of these matters have been referred to the DOJ yet.\u201d He also claimed that \u201cnone of these founders actually broke the law.\u201d<\/p>\n Krug said that at first, he \u201cdidn\u2019t really believe\u201d such settlements existed, but some founders \u2014 who he didn\u2019t name \u2014 later showed him their agreements.<\/p>\n Joey Krug (left) on stage with Axios\u2019 Brady Dale (right) at ETHDenver 2025. Source: Turner Wright\/Cointelegraph<\/em><\/p>\n<\/figcaption><\/figure>\n \u201cSure enough, there are clauses that say you can never work in crypto again [and] you can\u2019t talk about this to anyone,\u201d he said.\u00a0<\/p>\n \u201cIt was just a crazy, crazy administrative state that got really out of control.\u201d<\/p><\/blockquote>\n The SEC did not immediately respond to a request for comment.<\/p>\n Related: <\/strong><\/em>Saga CEO discusses crypto industry\u2019s shift toward GOP \u2014 ETHDenver<\/strong><\/em><\/a><\/p>\n Since 1972, the SEC has included a \u201cgag rule\u201d in its settlements that forbids defendants from criticizing<\/a> the agency\u2019s claims \u2014 a clause that Commissioner Hester Peirce has said \u201cundermines regulatory integrity.\u201d<\/p>\n Krug said the only way DeFi founders could comment on the settlements is if Congress asked them to testify. He added there are \u201ca lot of founders who would love to talk about how the government basically really screwed them over if Congress asked them to testify.\u201d<\/p>\n Earlier this month, the bank-regulating Federal Deposit Insurance Corporation released nearly 800 pages<\/a> of so-called \u201cpause letters\u201d that it sent banks and finance firms over their crypto services.<\/p>\n Both the US House and Senate held hearings on crypto debanking<\/a> in early February that heard from crypto executives on their claimed torrid dealings with trying to access financial services under the Biden administration.<\/p>\n