The Modern Steam Engine is Under Attack: Why the Crypto/Blockchain Industry Needs to Fight Operation Choke Point 2 as a Team

The Modern Steam Engine is Under Attack: Why the Crypto/Blockchain Industry Needs to Fight Operation Choke Point 2 as a Team

 The information below is for educational purposes only. It is not legal advice. We are not your lawyers unless you have a written agreement with us and even if we do it may not cover this. Ask me if you have any questions about your status.

TLDR: We are being attacked by the federal government for legitimate and illegitimate reasons and we need to work together to make sure this modern steam engine does not die.

For those that do not spend too much time watching the History Channel or other history-related media, the Heron of Alexandria (“Heron”) lived in the first century AD and, among other incredible feats, was responsible for the popularization of a steam-powered device called an aeolipile. This simple yet complex device laid the foundation for the 19th-century Industrial Revolution, nearly 1,700 years later. That is not a typo, 1-7-0-0 years.

The aeolipile created steam through boiling water and then spun on its axis to entertain the audience. However, had this technology been developed further, the Roman Empire could have developed steam engines. Think about how radically different our world today would be. I don’t blame Heron or the Romans. Plus, critics will say there are lots of devices and moments like this in history that could have fundamentally changed our world from gunpowder as black powder and the use of volcanic ash and salt water in cement to make it “self-healing”.

In fact, I would argue we are in a very similar position right now: we have discovered — through the revolution that is Bitcoin and blockchain — a new steam engine. And, after seeing what this technology can do, we must protect the modern steam engine.

Threats to the Modern Steam Engine

Operation Choke Point was an Obama-era initiative by the U.S. Justice Department in 2013 that attempted, with varying degrees of success to take down so-called undesirable businesses such as ammunition sales, coin dealers, credit repair services, debt consolidation scams, drug paraphernalia, escort services, firearm sales, get rich products, lifetime memberships, money transfer networks, online gambling, pawn shops, payday loans, pharmaceutical sales, pornography, racist material, surveillance equipment, tobacco sales and travel clubs.[1]

Any good person worth their salt, as my Southern mother would say, can find something in this abbreviated list that they personally do not like but capitalism waits for no one, and nor should the technology to enable legal activity involving the use of blockchain technology.[2]

Operation Choke Point had some success, but received resistance from bankers and, therefore, Congress. On January 29, 2015, the Federal Deposit Insurance Corporation (“FDIC”) issued a Financial Institution Letter that “…encourage(ed) supervised institutions to take a risk-based approach in assessing individual customer relationships, rather than declining to provide banking services to entire categories of customers without regard to the risks presented by an individual customer or the financial institution’s ability to manage the risk.”[3] This is the same FDIC that allows for $250,000 of individual deposit account protection but has granted Silicon Valley Bank unlimited protection.[4]

Later, in August 2017, the Trump administration ended Operation Choke Point on the grounds that it was preventing legitimate business activity rather than combatting fraud.[5] (Agreeing with the Trump Administration on anything is tough for most sane people so if you need a moment to reflect know that the Trump Administration is not blameless as you will see below). In November 2018, the FDIC promised Congress that they would implement “limitations on the ability of FDIC personnel to terminate account relationships.”[6]All such suggestions now need to be formal and in writing, and they must be sent to the FDIC Board of Directors. This process may be what was utilized to commandeer Signature Bank according to Barney Frank of the Dodd-Frank Act.[7]

The Current Challenges We Face

Here we are less than five years after these un-American efforts were supposed to stop. Instead, after a tumultuous year, with the Luna debacle, FTX, Celsius, Voyager Digital, Three Arrows Capital, etc. we look like a bad industry — an industry full of scammers and Ponzi schemes and we are. There are too many scammers, schemers, and downright liars in this industry but that is not because the industry or the technology is inherently evil. It’s because this is the new frontier.

So, the Biden Administration’s decision to kneecap an entire industry because we have legitimate problems is not the fault of Silvergate, Silicon Valley Bank, or especially Signature Bank, but instead Congress and most importantly, us tribalism has pushed us here. Though the Trump Administration played a hand in regional bank de-regulation that may have contributed to the collapse under the laughable title “Economic Growth, Regulatory Relief, and Consumer Protection Act.”[8] This is not about politics though. It is not about left or right, Republican or Democrat, it is about the modern steam engine and how we need to protect it.

I am completely dumbfounded that an industry where I see all of us working together — regardless of political beliefs, human hue, creed, or religion — has fallen into a position where we are attacked so efficiently and without remorse, including infighting. I’ve yet to see one of the major associations or trade groups work together with others to produce a united front against this assault (I hope we can change that soon). What I have seen is hardworking individuals and teams work tirelessly, but divided, and we are taking on a force far stronger than all of us: the United States federal government. And as much as we like to claim we are powerful and decentralized, we are not and we don’t need to be for this united front to work. Afterall, the second most powerful piece of legislation ever created, arguably behind the Bill of Rights, is the Securities Act of 1934 which was legend tells was drafted over a weekend.[9]

We need to form a cooperative so that we as an industry can protect this modern steam engine and the technology behind it from being destroyed. It is my firm belief that, as we have seen in U.S. politics alone, the use of misinformation and disinformation hurts us all and so it makes logical and arguably evolutionary sense that if you put enough humans on a planet like ours, they will want to communicate. Naturally, in those communications, there will be false information whether intentional or unintentional, as anyone who has played the “telephone game” knows.

The next logical step in this evolution of communication would be a technology that prevents the monkeys from monkeying with the information. Thus, a distributed, immutable ledger seems like an evolutionary certainty. However, as Heron, the Romans, and countless other inventors and innovators I’m sure would attest, it means absolutely nothing if the technology is not utilized and innovated upon.

We see this now in zero-knowledge proof, an evolutionary step in blockchain, regarding a horrific crime: child exploitation material.[10] The National Center for Missing & Exploited Children (“NCMEC”) has created a platform called “Take It Down,” which allows users to submit material they wish to have removed from participating sites, which will soon include Facebook, without uploading the images to a centralized server.[11] “Take it Down is based on a similar platform that was created for for adults to have non-consensual intimate imagery removed from platforms. The service was adapted by NCMEC engineers from this source.” NCMEC and the UK’s SWGfL are utilizing this technology now to improve and protect society. They are utilizing the modern steam engine to positively affect the lives of people harmed with material that causes lasting harm. Clearly, we should continue to protect and fight for this industry not least because of what it is doing to protect the rights and autonomy of victims and survivors of crime. If we build upon this technology, we will create a safer, more secure, and transparent financial system, capital markets, and commodity exchanges that will protect and serve us all.

But we must be a united force as it is clear that this technology is needed for the advancement of our society.

So, what are the next steps?

Over the coming weeks, we will be introducing new legal templates for various blockchain-based products to protect and help the evolution of this space while, hopefully, protecting the purchasers, investors, and market participants.

We, as Dunsmoor Law, will also be working and coordinating with other law firms, blockchain associations, and DAOs to aid in the creation of legislation for this industry and to help remove all doubt on what and how we are building.

We will also work alongside regulators, federal and state legislators, and executives to help them understand and appreciate the nature of these products because I firmly — personally and professionally — believe that they have seen too many bad products and harmful creations and not the good that is being created from this technology. We must protect the modern steam engine.

If you wish to join us or help in any form or fashion, please contact me at Info (at) or donate to the Blue Rock Organization at thebluerock.eth. (501(c)3 status pending).


[2] We are using the term “blockchain technology” to encompass all products including cryptocurrencies, non-fungible tokens (“NFTs”), decentralized autonomous organizations (“DAOs”) and decentralized financial (“DeFi”) products.





[7] Former U.S. Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank in takeover that he said was the wrong move. Despite a wave of withdrawals, the bank’s situation was under control before regulators swooped in;


[9] On June 6, 1934, FDR signed the Securities Exchange Act into law with Pecora, Cohen, Corcoran, and Landis all standing by. At one point Roosevelt asked Pecora, “Ferd, now that I have signed this bill and it has become law, what kind of law will it be?” “It will be a good or bad bill, Mr. President,” replied Pecora, “depending upon the men who administer it.” (Ritchie, 59)

[10] In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true while the prover avoids conveying any additional information apart from the fact that the statement is indeed true.


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