Silvergate Bank might have continued its operations if not for the voluntary liquidation it was forced into under pressure from American regulators, according to Castle Island Ventures partner Nic Carter.
My latest in @PirateWires:
Inside the Biden Admin’s Plot to Destroy Silvergate and Debank Crypto for Goodhttps://t.co/qGsSoi3aCG
— nic carter (@nic__carter) September 25, 2024
“Silvergate could have survived its downfall and was on the path to doing so,” wrote the expert.
He based his position on an analysis of the organization’s bankruptcy documents. In discussions with insiders, Carter discovered that the Biden administration had privately demanded the institution limit cryptocurrency deposits to 15% or face consequences.
Carter noted that the revival of the digital asset market at the end of 2023 would have helped Silvergate overcome its difficulties.
He described the bank’s voluntary liquidation as “suspicious” instead of reorganizing under the supervision of the FDIC. According to him, there have been only a few such cases in the past three decades.
“This is further evidence that Silvergate was ‘killed’ by regulatory actions, not by the sector’s collapse, which it survived,” he explained.
Carter acknowledged that the institution could have tightened controls on money laundering and detected FTX’s improper transfers much earlier.
Since March 2023, the expert suspects that US authorities have been conducting a campaign aimed at limiting organizations’ ability to maintain ties with crypto firms and interact with digital assets.
“The government’s attempt to ‘decapitate’ the industry through covert rule-making for its servicing institutions initiated and exacerbated the 2023 banking crisis,” commented the expert.
In February 2023, it became known that the US Department of Justice’s Fraud Section was investigating Silvergate Bank’s connection with the collapsed FTX and Alameda Research. Moody’s downgraded the organization’s rating due to a reduction in its baseline credit assessment.
On March 8, Silvergate Capital Corporation announced its intention to wind down operations and close the bank.
On March 10, the California Department of Financial Protection and Innovation closed Silicon Valley Bank (SVB) and appointed the FDIC as receiver due to “insufficient liquidity and insolvency.”
On March 13, US authorities began the resolution process for SVB and Signature Bank.
Earlier, former US Representative and board member of the latter, Barney Frank, criticized the regulator’s actions, stating that the NYDFS forcibly closed the bank due to its involvement in the digital asset industry.