Nic Carter Says Fed’s “Operation Choke Point 2.0” Collapsed Crypto Banking, Cites Silvergate Bank Implosion

The crypto industry has recorded increasingly stringent regulation from US authorities. As such, crypto natives have tagged the strict regulatory approach as “Operation Choke Point 2.0.” 

The regulatory method has downplayed the crypto growth trend, especially in the US. 

A prominent crypto proponent, Nick Cartel, explores the US Federal Reserve’s implementation of Operation Choke Point 2.0. Carter asserts that these stringent approaches collapsed crypto banking, citing Silvergate Bank’s implosion.

Carter Says Silvergate Bank Died by Murder, Not Suicide

Nick Carter, a prominent crypto advocate, explored how the US Federal Reserve’s regulatory role opposes crypto-friendly banks. He noted that the Fed’s approach contributed to the implosion of Silvergate Bank. 

Carter said Biden’s regulators, including OCC, Fed, and FDIC, have cracked down on crypto-related banks using “operation choke point 2.0.” He laid out his analysis on September 19 via a series of X threads.

This is the smoking gun: Silverage was solvent and able to operate, but the Fed had informed them they had to curtail their crypto business. Without a crypto business, they would have had to reshape the entire firm. It was _this_ that caused them to liquidate. pic.twitter.com/ptigCNQaT6

— nic carter (@nic__carter) September 19, 2024

The crypto evangelist recalled how the Biden administration worked against the crypto industry with several counterattacks. As part of Operation Choke Point 2.0, prominent financial regulators initiated a crackdown on crypto-friendly banks like Signature and Silvergate.

Carter noted that the attack triggered the implosion of the Silvergate bank, asserting that the bank’s failure had nothing to do with the collapse of FTX.

According to Carter, Silvergate remained solvent amid multiple redemptions it faced after the FTX crash. Instead, the Fed’s directives to cut Silvergate’s businesses with crypto-based deposits by 15% accounted for its collapse.

The crypto evangelist revealed that he initially believed the FDIC was responsible for the pressure on Silvergate. Instead, he discovered that the Fed acted behind the scenes against the bank using its drastic directives.

Carter stated: “One point I’ve endeavored to make is that Silvergate died by murder, not suicide. The critical point is that the Fed told them after the drawdown that they had to cut their crypto deposits to 15% of their book, dooming them (this is obviously unconstitutional, by the way).”

Moreover, Carter pointed out that the approach, whether from the FDIC or Fed, killed pro-crypto banks. The stringent enforcement limits crypto entities from accessing banking.

Meanwhile, this week, Silvergate Bank filed for Chapter 11 bankruptcy following the regulatory pressure on the bank. 

Silvergate Bank’s Ex-Exec Collaborates Nic’s Indications

In line with the bank’s testation in its Chapter 11 bankruptcy proceedings, Silvergate’s former exec Elaine Hetric confirmed Nic’s assertions.

Hetric noted that the bank survived the FTX implosion and the subsequent crypto market crash. However, the regulatory directives to reduce the bank’s crypto exposure contributed to its implosion.

Additionally, Hetric affidavit reflects the overall outlook of the US’s broader regulatory impacts. Notably, the regulators’ requirements mandate excluding crypto-based business activities from bank acquisitions. 

The situation supports Carter’s analysis of Silvergate’s collapse through “Operation Choke Point 2.0” from US regulators.

Similarly, Paul Grewal, Coinbase’s Chief Legal Officer (CLO), mentioned the overbearing regulatory approach to crypto from the regulators. He noted that the public needs to see the trend while applauding Carter for his good work.

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