Nic Carter, a venture investor, has updated his analysis of Operation Choke Point 2.0 in light of recent testimony from a Silvergate executive that shows how U.S. financial regulators are cracking down on banks that work in the cryptocurrency sector.
Carter fixed some mistakes in his widely read 2023 report in a series of tweets on September 20. He made it clear that the San Francisco Federal Reserve, not the Federal Deposit Insurance Corporation (FDIC), told area banks to cut crypto deposits by 15%. Banks like Silvergate, Signature Bank, and Silicon Valley Bank were greatly affected by this order.
Carter Cites Hetric’s Statement
Carter used a statement from Elaine Hetric, who used to be the chief administrative officer of Silvergate, to show that governmental pressure played a part in the bank’s bankruptcy. He says that Hetric’s statement backs up what he said about Operation Choke Point 2.0, which is a set of government efforts to limit crypto transactions.
Carter says that the story about how Silvergate went down—that losses from crypto depositors and fraud linked to FTX—is not telling the whole story. He stresses that Silvergate was eventually found not guilty of any wrongdoing and had been able to weather previous market downturns.
In its place, he says that the bank’s failure was caused by attempts by the government to stop banks from dealing with digital assets. Even after Silvergate and SVB filed for bankruptcy, they couldn’t get rid of their digital assets because the Office of the Comptroller of the Currency said their crypto businesses were not valid.
This included things like Sentient Coin and Signet, the payment network run by Signature Bank. Carter says that Operation Choke Point 2.0 is a coordinated attempt by different U.S. regulators to stop banks from working with crypto firms.
He bases this on statements made by the Fed, the FDIC, and the OCC that stress the risks. He says that even though these kinds of relationships weren’t officially against the law, the fact that banks didn’t want to do them caused them to lose a lot of funds.
Carter said, “These banks did not die by suicide; they died by murder.” He called it a major crime in which no one was held responsible.
