Venture Capitalist Nic Carter returns with a new article that explores at-length how the Biden administration allegedly imposed an informal mandate for banks to cap their crypto deposits at 15%, leading to the downfall of Silvergate, Signature and Silicon Valley Bank.

A year after the release of his two original reports centered around Operation Choke Point 2.0, Carter has published a third article on Sept. 25. This time, he focuses on the downfall of Silvergate, the now-bankrupt Californian bank that provided cryptocurrency services.

In it, Carter states that interviews with protected inside sources and bankruptcy filings suggest that Silvergate could have survived if it were not for “pressure from regulators, which allegedly included an informal mandate to cap its crypto deposits at 15 percent.”

Carter wrote that at the time, Silvergate was under intense scrutiny by financial regulators, including Federal Deposit Insurance Corporation and US Senators like Elizabeth Warren, due to the bank’s association with former banking client, FTX. Though, claims of criminal wrongdoing related to Silvergate’s association with FTX have never been proven and the bank was cleared of criminal charges.

“Sen. Elizabeth Warren all but accused Silvergate of aiding and abetting FTX’s crimes, creating an “atmosphere of concern” around Silvergate that possibly contributed to a run on the bank,” said Carter.

This political pressure ultimately led to the Federal Home Loan Banks refusing to renew Silvergate’s monthly loan agreement, accelerating the bank’s losses. An unnamed Silvergate source told Carter that the bank was forced to comply with the 15% rule.

“They have eight million ways to shut us down, anyway they want. When they say you gotta do something, you do it. The caps were never publicly discussed or formally opposed as a rule, but when your primary regulator threatens you, you comply.”

Silvergate insider

Carter explained that it was difficult to prove the existence of the 15% threshold due to the fact that it was considered “confidential supervisory information, and hence ineligible to be shared publicly.”

But he was certain that Silvergate’s downfall could have been the instigator behind the 2023 regional banking crisis, which ultimately took down other crypto-affiliated banks like Signature, Silicon Valley Bank, and First Republic.

He also found it odd that Silvergate chose to liquidate voluntarily instead of entering an FDIC receivership.

“How rarely banks choose voluntary liquidation is further evidence Silvergate was ultimately killed by regulatory mandate, not the bank run it suffered,” he said.

Even after the 2023 crisis, Carter noted that the same pattern occurred with the two other firms known to still bank in crypto, Customers and Cross River.

In May 2023, the FDIC sent Cross River a consent order which covered the bank’s fintech partnerships. While in August 2024, Federal Reserve Bank of Philadelphia issued an enforcement action against Customers Bank, citing deficiencies with the bank’s “risk management practices and compliance with the applicable laws, rules, and regulations relating to anti-money laundering.”

According to Carter:

“Washington’s desire to take down the crypto banks — which they accomplished deftly in March 2023 — was the spark that lit the fire of a massive regional banking crisis, which spread far beyond crypto. Yet today, no one levels criticism at President Biden, Senator Warren, or the Fed for starting a banking crisis in their attempts to stymie the crypto sector.”