Former Silvergate CTO says bank was 'stabbed in the back' by regulators in 2023
Chris Lane, former CTO of Silvergate Bank, published a “personal view” on the bank’s closure on X, accusing regulators of “baiting and switching” on a bank that was once favored by many in the crypto industry.
Silvergate Bank voluntarily closed and liquidated in March 2023 as part of a regional banking crisis sweeping the United States, which led to the collapse of three mid-sized banks (Silvergate, Silicon Valley Bank, and Signature Bank) in just five days. In a filing with the U.S. SEC at the time, the company stated: “Given recent industry and regulatory developments, Silvergate believes that an orderly closure of banking operations and voluntary liquidation of the bank is the best path forward.”
However, since the bank’s closure, multiple executives have explicitly blamed regulators for a sudden shift that ultimately prevented Silvergate Bank from continuing its digital asset-centric business model.
“Silvergate became the object of its services to cryptocurrency clients, a strategic vertical we had focused on since 2013,” Lane wrote. “Regulators stepped in sometime in the spring of 2023 and severely limited the amount of USD deposits we could hold for digital asset clients, directly impacting our entire business model.”
Several influential figures in Washington blamed the turmoil in the cryptocurrency industry, especially after the collapse of FTX, for sparking the collapse of Silvergate, which had provided some banking services to the exchange, which filed for bankruptcy in November 2022. “As the go-to bank for cryptocurrency, the collapse of Silvergate Bank is disappointing, but predictable,” U.S. Senator Elizabeth Warren wrote on X when Silvergate collapsed. “I warned that Silvergate’s behavior was dangerous and even illegal, and found serious due diligence lapses. Now, customers must be compensated for their losses, and regulators should strengthen their oversight of cryptocurrency risks.”
However, Lane defended Silvergate’s solvency after the collapse of FTX in his post, “Our business was not perfect, and we did provide banking services to FTX, as did many other banks. But Silvergate was solvent, and Liquid (I believe) was stabbed in the back by our regulators.”
Some figures in the crypto space claim that the coordinated actions taken by regulators to restrict the digital asset industry’s access to U.S. banks can be considered “Operation Choke Point 2.0,” an evolution of a 2013 Department of Justice initiative to investigate banks that provided services to certain high-risk or suspicious financial businesses, such as payday loan companies. (The Block)
Yesterday, David Sacks, the incoming AI and "crypto czar" of the Trump administration, said that "there are too many stories about people being harmed by Operation Choke Point 2.0" and said the so-called move "needs to be reviewed."