Could Silvergate Bank have weathered the storm? Some experts say yes—if regulators hadn’t stepped in to “decapitate” the crypto industry.
Nic Carter, a partner at Castle Island Ventures, argues that Silvergate was on track for survival until the Biden administration imposed a 15% cap on crypto deposits.
According to Carter, this is proof that “Operation Choke Point 2.0” is real—a covert attempt to cut off crypto-friendly banks from the industry.
Carter’s claims are backed by insider reports and recent bankruptcy filings that paint a picture of intense government pressure. The Federal Deposit Insurance Corporation (FDIC) and prominent lawmakers like Senator Elizabeth Warren reportedly demanded answers on Silvergate’s relationship with crypto clients, particularly the controversial FTX.
When faced with an ultimatum—comply with the 15% cap or face consequences—Silvergate had no choice but to fold.
In a rare move, Silvergate opted for voluntary liquidation rather than entering FDIC receivership. This decision, according to Carter, is almost unheard of in the banking world.
“When Silvergate’s leadership expressed their plan to liquidate voluntarily, even California regulators didn’t know how to handle it,” Carter noted, emphasizing that such a choice adds to the suspicion of regulatory overreach.
Interestingly, the markets rebounded strongly in late 2023, leading crypto firms to recover and further supporting the idea that Silvergate could have survived.
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Despite its faults—Carter acknowledges Silvergate could have been stricter on money laundering and FTX’s questionable transfers—he firmly believes the bank was pushed out, not simply a victim of a bank run.
Without the 15% cap, Carter claims Silvergate would still be thriving today.
