According to Cointelegraph, Silvergate Bank, once a prominent crypto-friendly institution, might have survived if not for the intervention of United States regulators, claims Nic Carter, a partner at Castle Island Ventures. Carter argues that the bank was on a recovery path before being forced into voluntary liquidation by regulatory pressures aimed at curbing the cryptocurrency industry.

In a Sept. 25 article on Pirate Wires, Carter cited Silvergate’s bankruptcy filings and insider conversations, revealing that the Biden administration mandated the bank to limit crypto deposits to 15% or face severe consequences. This directive, according to Carter, is part of what he terms 'Operation Choke Point 2.0,' a coordinated effort to discourage banks from engaging with crypto firms amid the 2023 banking crisis.

Carter asserts that the government's covert rulemaking against crypto-focused banks exacerbated the banking crisis, the largest since the 2008 financial meltdown. He emphasized the critical role banks play for digital asset companies in accepting deposits, enabling customer on-ramps, and managing expenses. Other crypto-friendly banks like Signature Bank and Silicon Valley Bank also faced closure under similar pressures from the Federal Deposit Insurance Corporation and US Senators, including Elizabeth Warren.

An insider from Silvergate disclosed to Carter that the firm had no choice but to comply with the 15% cap or risk shutdown. The insider noted that regulatory threats left the bank with little room for opposition. Carter found the decision for voluntary liquidation suspicious, highlighting that such a move is rare and typically not the first course of action for banks in distress.

Carter believes that Silvergate’s balance sheets would have recovered with the market rebound in late 2023 and early 2024, suggesting the bank could have survived without the imposed restrictions. While acknowledging that Silvergate had its shortcomings, such as inadequate money laundering controls and delayed identification of FTX’s improper transfers, Carter contends that these issues did not justify the regulatory harassment that led to the bank’s demise.

Carter’s report coincides with Vice President Kamala Harris’s statement on the US's intention to remain dominant in emerging technologies like blockchain and artificial intelligence.