Crypto evangelist Nic Carter has recently exposed how the Federal Reserve has played a crucial role in pushing the crypto-friendly Silvergate Bank to the path of bankruptcy. He added that as part of Operation Choke Point 2.0, Biden’s regulators – the Fed, FDIC, and OCC – systematically cracked down on banks serving the crypto space.
How Fed’s Operation Choke Point 2.0 Impacted Silvergate Bank
In early 2023, the Biden administration’s top financial regulators launched a coordinated attack on crypto-friendly banks Silvergate and Signature as part of “Operation Choke Point 2.0“. Crypto evangelist provides key details of how this led to a forceful collapse of the Silvergate Bank.
Amid the mounting regulatory pressure, Silvergate Bank filed for Chapter 11 bankruptcy earlier this week. Carter rejects all previous reports that the bank fell due to market losses and exposure to FTX. He said that despite facing significant redemptions following the FTX collapse, the bank remained solvent. Back in July, an ex-FTX official blamed Silvergate Bank for the exchange’s questionable transactions.
However, Carter noted that the Fed’s directives to drastically reduce the crypto-related deposits to less than 15% of its business, ultimately led to its demise. Carter noted that initially, he thought that the FDIC was choking the bank, however, it turns out that the Fed was actually passing the guidance behind the curtains. “One point i’ve endeavored to make is that Silvergate died by murder, not suicide,” writes Carter.
Former Executive Confirms the Regulatory Crackdown
As part of the declaration in the Chapter 11 bankruptcy proceedings, Former Silvergate executive Elaine Hetric has corroborated Nic Carter’s observations. She confirmed that while Silvergate survived the market downturn, the regulatory mandate to reduce its crypto exposure forced the bank to shut down.
Besides, Hetric’s affidavit also points out broader regulatory efforts, including the exclusion of crypto-related business lines from bank acquisitions. This further confirms Carter’s claims that Silvergate was “killed by design” under Operation Choke Point 2.0. Carter wrote:
“what the Biden admin is doing is blatantly illegal. Cooper and Kirk, the law firm that sued over OCP 1.0 under Obama, has pointed out that OCP 2.0 violates the fifth amendment.”
Coinbase CLO Paul Grewal took this opportunity calling out the regulators for their high-handedness in crypto regulations. “That’s what the public deserves to see for itself and why we are pursuing our FOIA suit,” he said. He also challenged SEC’s “crypto asset security” claims ahead of a key House Financial Services Committee hearing.
“Increased supervisory pressure.” That’s what the public deserves to see for itself and why we are pursuing our FOIA suit. @nic__carter has done important work here that shouldn’t be ignored. https://t.co/lEa6plgrVt
— paulgrewal.eth (@iampaulgrewal) September 20, 2024
The post Silvergate Bank Bankruptcy: How Fed’s Operation Choke Point 2.0 Collapsed Crypto Banking appeared first on CoinGape.
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