The former chief risk officer of Silvergate Bank, Kate Fraher, has responded to the U.S. Securities and Exchange Commission’s decision to remove its long-standing “no-deny” settlement rule. The policy, known as Rule 202.5(e), had stopped people who settled with the SEC from publicly denying or criticizing the agency’s claims.
Fraher said the rule pushed her into a difficult settlement and limited her ability to share her side of the story. Now that the rule has been removed, she says she can finally speak openly about what happened during the regulatory case involving Silvergate.
1/5
**The Freedom to Speak: Reflecting on Risk Management, Regulatory Overreach, and Yesterday’s SEC Decision**
Yesterday, the SEC made a historic announcement: it officially rescinded its 50-year-old “gag rule” (Rule 202.5(e)), ending the policy that prohibited settling…
— Kate Fraher (@jaredkate) May 21, 2026
Why did the SEC remove its rule limiting public denial after settlements?
The SEC has removed its long-standing policy that stopped people who settled cases from publicly challenging the agency’s claims. SEC Chair Paul Atkins said the change supports free speech and brings the SEC closer to how other federal regulators operate.
The move now allows individuals and companies to settle cases without being forced to stay silent, marking a major change in how the agency handles enforcement.
What happened during Silvergate’s collapse and regulatory pressure?
Fraher reflected on Silvergate’s role during the FTX collapse in 2022, when the bank saw about a 70 percent drop in deposits. She said the bank stayed stable, protected all depositors, and later chose to wind down voluntarily because of growing regulatory pressure on crypto-related businesses.
She also said that no regulator has shown any failure in the bank’s compliance systems. In her view, wider political pressure had more influence on the outcome than any operational problems.
Is SEC settlement pressure fair for defendants?
Fraher said the settlement process is very uneven, with strong financial and professional pressure on people facing federal investigations. She said defendants often have few options, including expensive court battles or settling without admitting any wrongdoing.
She welcomed the end of the gag rule, but said the damage from past enforcement cases does not go away. She added that reputational and financial effects can continue even after rules change, raising concerns about fairness in how settlements are handled.
Meanwhile, SEC may be on the verge of a major shift toward blockchain-based finance, with Chair Paul Atkins hinting that a long-anticipated “innovation exemption” for tokenized securities could roll out within weeks.
Enjoyed this? Bookmark DeFi Planet, explore related topics, and follow us on Twitter, LinkedIn, Facebook, Instagram, Threads, and Coin MarketCap Community for seamless access to high-quality industry insights.
“Take control of your crypto portfolio with DeFi Planet PRO, DeFi Planet’s suite of analytics tools.”
