Venture capitalist Nic Carter shares updates on Operation Choke Point 2.0, following testimony from a Silvergate executive that clarifies how U.S. financial regulators have been attempting to suppress banks engaged in the crypto sector, identified as Operation Choke Point 2.0.
In his thread, Carter revises points from his prominent original report from 2023, correcting the misconception that the Federal Deposit Insurance Corporation was responsible for instructing banks to reduce their crypto deposits by 15%.
In reality, it was the San Francisco Fed that issued this directive to banks in that area, impacting major crypto-related institutions such as Silvergate, Signature Bank, and Silicon Valley Bank.
In a collection of tweets shared on X on September 20, Carter refers to a declaration from Elaine Hetric, former chief administrative officer of Silvergate, the California-based bank that provided cryptocurrency services. According to Carter, these new insights offer evidence that pressure from Federal Bank Regulatory Agencies to limit their crypto operations contributed to the bankruptcy of Silvergate.
Carter asserts that Hetric’s statement reaffirms his investigation into Operation Choke Point 2.0, a series of actions the U.S. federal government undertook to restrict crypto financial transactions.
He highlights that this marks the first instance of an executive from the now-defunct Silvergate officially discussing the Biden administration’s regulatory efforts to deter banks from engaging with crypto, suggesting:
Carter further explains how the public has been misled to think that Silvergate’s bankruptcy was due to losses from their crypto depositors and allegations of fraud related to FTX. In actuality, Silvergate managed to survive the fallout and faced no charges. These new observations reinforce Carter’s broader claim that the Democratic Party, under the Biden administration, has actively worked to retroactively suppress the crypto industry as it integrated into conventional financial institutions like banks.
According to Carter, the efforts of the U.S. government to deter banks from engaging in digital assets were the real cause of Silvergate’s demise.
“Silvergate was a boutique crypto bank that served the crypto industry. so after the Fed came out with this new informal guidance, their business ceased to exist, and they voluntarily liquidated.”
Nic Carter
Even after the bankruptcies of Silvergate and SVB, neither bank could sell their digital assets, as any crypto-related lines of business would be rendered void according to the Office of the Comptroller of the Currency. This includes assets like the cryptocurrency Sentient Coin and Signature Bank’s failed cryptocurrency payment platform Signet, along with other crypto deposits held at those banks.
What is Operation Choke Point 2.0?
Operation Choke Point 2.0 refers to a coordinated effort by U.S. financial regulators across various agencies aimed at discouraging banks from associating with crypto firms.
Government entities, such as the Fed, FDIC, and OCC, have issued statements emphasizing the risks banks face if they engage with cryptocurrency.
While there was no direct prohibition, this led to financial institutions turning away from crypto collaborations. Consequently, banks primarily involved with cryptocurrency experienced substantial losses.
A few examples brought up by Carter include Metropolitan Commercial Bank’s closure of its cryptocurrency department, Binance halting U.S. dollar bank transfers for retail clients, and the investigation into Silvergate’s handling of accounts related to the crypto trading entity Alameda Research.
“These banks did not die by suicide but by murder,” Carter asserted. “This remains a gigantic scandal and no one has ever faced any responsibility for it.”
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