A new perspective on the downfall of Silvergate Bank, once a major player in the cryptocurrency sector, has emerged from industry executive Nic Carter.
In a September 25 article for Pirate Wires, Carter, a partner at Castle Island Ventures, suggested that the bank could have survived its challenges if not for what he describes as intense regulatory pressure aimed at “decapitating” the crypto industry.
Carter’s claims, based on bankruptcy filings and insider discussions, paint a picture of a coordinated effort by U.S. regulators to discourage banks from engaging with crypto firms. He alleged that the Biden administration ordered Silvergate to cap crypto deposits at 15%, threatening consequences for non-compliance.
This, Carter argued, supports his theory of “Operation Choke Point 2.0,” a term he coined to describe the perceived regulatory crackdown on crypto-friendly banks during the 2023 banking crisis.
RELATED: Silvergate Bank’s Exit: A Turning Point for Crypto Banking?
The executive points to “inordinate pressure” from the Federal Deposit Insurance Corporation (FDIC) and lawmakers like Senator Elizabeth Warren as key factors in Silvergate’s demise. He finds the bank’s decision to voluntarily liquidate, rather than enter FDIC receivership, particularly suspicious, noting its rarity in banking history.
While acknowledging that Silvergate wasn’t without fault, particularly in its anti-money laundering measures and oversight of FTX transfers, Carter maintains that the bank didn’t deserve to be “harassed out of existence.” He argued that the government’s covert actions against crypto-focused banks not only triggered but exacerbated the 2023 banking crisis.
This perspective comes as Vice President Kamala Harris, now the Democratic Party’s leading presidential candidate, made her first public comments on cryptocurrency. At a Wall Street fundraiser, Harris pledged support for AI and digital assets, emphasizing a balance between innovation and consumer protection.
“We will invest in America’s future and encourage innovation while protecting consumers and investors,”
She stated.
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