A new report by Nic Carter reveals how regulators ‘killed off’ Silvergate and Signature

Venture Capitalist Nic Carter returns with a new article that takes a detailed look at how the Biden administration imposed an informal order on banks to cap cryptocurrency deposits at 15%, leading to the collapse of Silvergate, Signature, and Silicon Valley Bank.

A year after the publication of his two original reports centered around Operation Choke Point 2.0, Carter published a third article on September 25. This time, it focuses on the collapse of Silvergate, a now-bankrupt California bank that provided cryptocurrency services.

In that article, Carter claims that interviews with protected inside sources and bankruptcy filings show that Silvergate could have survived without “regulatory pressure,” which “included an informal requirement to cap cryptocurrency deposits at 15 percent.”

At the time, Silvergate was under intense scrutiny from financial regulators, including the Federal Deposit Insurance Corporation and U.S. Senators such as Elizabeth Warren, because of its relationship with former banking client FTX, Carter wrote. However, criminal allegations regarding Silvergate’s relationship with FTX were never proven, and the bank was cleared of criminal charges.

“Senator Elizabeth Warren accused Silvergate of aiding and abetting FTX’s crimes and creating an ‘atmosphere of anxiety’ around Silvergate that would likely lead to a bank run,” Carter said.

This political pressure led the Federal Home Loan Banks to refuse to renew Silvergate’s monthly loan agreement, accelerating the bank’s losses. An unnamed Silvergate source told Carter that the bank was forced to comply with the 15% rule.

“They have eight million ways to silence us any way they want. When they say you have to do something, you do it. Ceilings are never publicly discussed or formally challenged, as a rule, but when your primary regulator threatens you, you take notice.”

Silvergate insider

Carter explained that proving the existence of the 15% threshold is difficult because it is “considered confidential audit information and therefore not appropriate to share with the public.”

But he was certain that the Silvergate collapse could be the trigger behind the 2023 regional banking crisis that eventually brings down other cryptocurrency-related banks like Signature, Silicon Valley Bank, and First Republic.

He also found it odd that Silvergate chose to voluntarily liquidate rather than enter FDIC bankruptcy management.

“How rarely banks choose voluntary liquidation is further evidence that Silvergate was ultimately eliminated by regulatory imperatives and not eliminated by the bank run it experienced,” he said.

Carter noted that the same pattern was experienced at two other firms, Customers and Cross River, which are known to be banking with cryptocurrencies even after the 2023 crisis.

In May 2023, the FDIC sent Cross River a consent order covering the bank’s fintech partnerships. In August 2024, the Federal Reserve Bank of Philadelphia initiated an enforcement action against Customers Bank, citing deficiencies in the bank’s “risk management practices and compliance with applicable laws, rules, and regulations regarding anti-money laundering.”

According to Carter:

“Washington’s desire to take down crypto banks — which they masterfully accomplished in March 2023 — was the spark that ignited a major regional banking crisis that has spread far beyond crypto. Yet today, no one is criticizing President Biden, Senator Warren, or the Fed for instigating a banking crisis in their attempt to stifle the crypto industry.”