Crypto Bank Anchorage Probed by U.S. Homeland Security

By Rebecca UngarinoA group within the U.S. Department of Homeland Security that combats money laundering and other financial crimes has launched an inquiry into cryptocurrency company Anchorage Digital Bank, a Wall Street-backed startup that has been a strong supporter of President Donald Trump's agenda on digital assets.In recent weeks, Homeland Security's El Dorado Task Force has contacted former Anchorage Digital employees to inquire about the company's practices and policies, people familiar with the inquiry said.The nature of the previously unreported probe was unclear. The El Dorado Task Force is administered by an investigative arm of Homeland Security and says its mission is to "disrupt and dismantle transnational money laundering organizations" in part by conducting "aggressive proactive investigations."A spokesperson for Anchorage declined to comment. Representatives for Homeland Security didn't provide comment.The 400-person firm sells crypto offerings such as asset safeguarding and trading capabilities to financial institutions and governments, and is best known for its custody services. BlackRock last week named Anchorage as a new custodian for its crypto exchange-traded products.Anchorage's backers include Goldman Sachs, Andreessen Horowitz, KKR, and Wellington Management.In April 2022, the Office of the Comptroller of the Currency directed Anchorage as part of a consent order to fix deficient controls around client due diligence, monitoring suspicious customer activity, and anti-money-laundering guardrails. The banking regulator said in its order at the time that Anchorage violated the Bank Secrecy Act, which covers financial crime prevention, and that the firm was taking action to remedy the issues the OCC had found.Anchorage said at the time that it had "already been working to strengthen the areas identified and will continue to bolster these areas, reinforcing a new, digital asset standard" for money-laundering prevention controls. Anchorage remains under the consent order.The probe by Homeland Security comes as Anchorage highlights its status as a regulated bank to regulators and politicians in Washington, D.C., and fosters ties with Trump administration officials, who could dial back crypto regulations. Anchorage and its competitors in the crypto space have engaged with regulators and policymakers across administrations for years. Trump, while promoting his own cryptocurrency, has vowed to turn the U.S. into "the crypto capital of the world" and open opportunities for the industry.In January, Anchorage, Kraken, and other firms hosted a black-tie " Crypto Ball" event in D.C. to welcome the new administration. Nathan McCauley, the chief executive and co-founder of Anchorage, attended the Digital Asset Summit held at the White House last month."Crypto is in good hands," McCauley wrote in a post on X on April 4 along with a photo of himself with Bo Hines, the executive director of the President's Council of Advisers for Digital Assets.McCauley has become a face of an issue that Trump has championed: squashing " debanking," a term that refers to a bank closing a client's account because it deems the relationship too risky to maintain. In early February, McCauley testified before the Senate Banking Committee about his firm's experience with debanking, echoing other crypto leaders' claims of having their accounts shut down.Anchorage has brought former regulators and seasoned bankers onto its board of directors and leadership team to help guide the firm as the crypto regulatory backdrop shifts.In the past two years Connie Shoemaker, a former longtime Goldman Sachs executive, and Julie Williams, who was the OCC's chief legal adviser during the 2008-09 financial crisis, joined the board.Last year Anchorage named TuongVy Le, who previously handled crypto investigations at the Securities and Exchange Commission, as its general counsel. Le recently moved into an advisory role with Anchorage because she is considering offers outside of the firm, a person familiar with her thinking said. Le is Anchorage's second general counsel to exit the role in two years.McCauley and Diogo Mónica, now the executive chairman of Anchorage and general partner at digital asset-focused venture-capital firm Haun Ventures, co-founded Anchorage eight years ago. It was last valued at $3 billion following a funding round in 2021. That January, under former regulator Brian Brooks, Anchorage secured what remains the only national bank charter for a U.S. crypto firm from the OCC.Write to Rebecca Ungarino at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.