Venture Capitalist Nic Carter has published a new article delving into allegations that the Biden administration imposed an informal mandate on banks to cap their crypto deposits at 15%, contributing to the downfall of Silvergate, Signature, and Silicon Valley Bank.

A year after releasing his original reports on Operation Choke Point 2.0, Carter’s third article, published on September 25, scrutinizes the collapse of Silvergate, a now-bankrupt Californian bank that offered cryptocurrency services.

Regulatory Pressure on Silvergate

Carter claims that interviews with protected inside sources and bankruptcy filings suggest Silvergate could have survived if not for regulatory pressure, including an alleged informal mandate to limit its crypto deposits to 15%.

“Sen. Elizabeth Warren all but accused Silvergate of aiding and abetting FTX’s crimes, creating an ‘atmosphere of concern’ around Silvergate that possibly contributed to a run on the bank,” said Carter.

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

“They have eight million ways to shut us down, anyway they want. When they say you gotta do something, you do it. The caps were never publicly discussed or formally opposed as a rule, but when your primary regulator threatens you, you comply,” stated a Silvergate insider.

Confidential Supervisory Information

Carter explained the difficulty in proving the 15% threshold’s existence, as it was considered “confidential supervisory information” and could not be shared publicly. However, he believes Silvergate’s downfall may have triggered the 2023 regional banking crisis, affecting other crypto-affiliated banks like Signature, Silicon Valley Bank, and First Republic.

Voluntary Liquidation

Carter found it peculiar that Silvergate chose to liquidate voluntarily instead of entering an FDIC receivership.

“How rarely banks choose voluntary liquidation is further evidence Silvergate was ultimately killed by regulatory mandate, not the bank run it suffered,” he said.

Impact on Other Crypto Banks

Even after the 2023 crisis, Carter noted similar patterns with other firms still banking in crypto, such as Customers Bank and Cross River Bank. In May 2023, the FDIC issued a consent order to Cross River covering its fintech partnerships. In August 2024, the Federal Reserve Bank of Philadelphia took enforcement action against Customers Bank, citing deficiencies in risk management practices and compliance with anti-money laundering regulations.

“Washington’s desire to take down the crypto banks — which they accomplished deftly in March 2023 — was the spark that lit the fire of a massive regional banking crisis, which spread far beyond crypto. Yet today, no one levels criticism at President Biden, Senator Warren, or the Fed for starting a banking crisis in their attempts to stymie the crypto sector,” Carter concluded.

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