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Venture Capitalist Nic Carter Updates Findings on Operation Choke Point 2.0
Nic Carter, a prominent venture capitalist, has updated his findings on Operation Choke Point 2.0 following testimony from a Silvergate executive. This sheds light on how US financial regulators attempted to crack down on banks involved in the cryptocurrency industry.
Key Corrections and New Revelations
In his updated report, Carter clarifies that it was not the Federal Deposit Insurance Corporation (FDIC) responsible for directing banks to cut their crypto deposits by 15%. Instead, it was the San Francisco Federal Reserve that issued this directive, impacting major crypto-related banks such as Silvergate, Signature Bank, and Silicon Valley Bank.
Testimony from Silvergate’s Former Executive
On September 20, Carter shared a series of posts detailing new revelations from Elaine Hetric, the former Chief Administrative Officer of Silvergate. Her declaration, as part of Silvergate’s Chapter 11 filings, provides evidence that pressure from federal regulatory agencies led to Silvergate’s bankruptcy.
“Elaine Hetric’s statement completely corroborates my reporting on Operation Choke Point 2.0,” Carter noted.
Understanding Operation Choke Point 2.0
Operation Choke Point 2.0 refers to coordinated efforts by US financial regulators to discourage banks from engaging with cryptocurrency firms. Agencies like the Federal Reserve, FDIC, and the Office of the Comptroller of the Currency (OCC) issued statements highlighting the risks associated with cryptocurrencies. Although not explicitly prohibited, these statements led many banks to withdraw from the crypto sector.
Impact on the Crypto Industry
Carter argues that the public was misled into believing Silvergate’s bankruptcy was due to losses from crypto depositors and allegations of FTX-related fraud. However, he emphasizes that Silvergate survived these challenges and was cleared of all charges. According to Carter, the true cause of Silvergate’s downfall was the US government’s efforts to discourage banks from dealing in digital assets.
“Silvergate was a boutique crypto bank that served the crypto industry. After the Fed’s new informal guidance, their business ceased, leading to voluntary liquidation,” Carter explained.
Consequences for Crypto Banks
Even after the bankruptcy of Silvergate and Silicon Valley Bank (SVB), they were unable to sell their digital assets. The OCC deemed any crypto-related lines of business null. This included assets like Sentient Coin and Signature Bank’s failed cryptocurrency payment network, Signet.
Significance of Hetric’s Testimony
Hetric’s testimony is critical as it provides direct, on-the-record evidence under penalty of perjury. It supports the notion that the Biden administration directly forced Silvergate out of business, contrary to the belief that they failed due to internal issues.
“The Biden administration directly forced Silvergate out of business; they did not fail on their own,” Carter asserted.
Examples of Operation Choke Point 2.0’s Impact
- Metropolitan Commercial Bank closed their cryptocurrency department.
- Binance suspended U.S. dollar bank transfers for retail clients.
- Silvergate faced investigations regarding their management of accounts related to Alameda Research.
According to Carter, “These banks did not die by suicide but by murder. This remains a gigantic scandal, and no one has ever faced any responsibility for it.”
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