As 2021 unfolded, Sam Bankman-Fried and Caroline Ellison engineered FTX into a sprawling $26 billion empire fit for a king and queen. That fortune quickly translated into political influence, with the two substantially contributing to mostly Democratic candidates and causes.
When FTX went under in 2022, however -causing the collapse of several banks, including Silvergate and Silicon Valley bank, to name a few – Democrats wanted revenge.
Enter Joe Biden.
Silvergate could have survived the collapse of FTX. They couldn’t survive Biden’s “Operation Choke Point 2.0” against crypto companies. Nic Carter, a partner at Castle Island Ventures, argues that federal regulators unfairly targeted banks, forcing them to distance themselves from crypto firms under the guise of stability.
“I believe Silvergate could have survived its drawdown — and was on a path to do so,” Nic Carter, a partner at blockchain-focused Castle Island Ventures, wrote in a Sept. 25 Pirate Wires article. “The government’s desire to decapitate the domestic crypto industry through covert rulemaking aimed at crypto-focused banks both initiated and worsened the banking crisis of 2023.”
The Biden administration reportedly capped crypto deposits at Silvergate, warning of harsh penalties for resistance. Carter claims this was a deliberate tactic to curb crypto’s fusion with traditional finance.
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The Ripple Effect On Crypto Industry Post Caroline Ellison FTX
Democrats are feeling the heat right now.
First, Caroline Ellison, a major Democrat supporter, went down, and now the Mayor of New York City is Eric Adams, where I used to live!? Crazy times.
Silvergate’s shutdown marks more than an isolated incident; it’s a repeated pattern from the Biden administration. Banks are vital in this realm, handling deposits, transactions, and user access. Losing crypto-friendly banks like Silvergate, along with Signature and Silicon Valley Bank, hampers these crucial activities, possibly stalling industry momentum.
“They have eight million ways to shut us down, anyway they want. When they say you gotta do something, you do it,” a Silvergate insider revealed to Carter.
Operation Choke Point 2.0 is real. Until Biden leaves the White House, it seems that the entire crypto industry will pay for the mistakes of SBF and Caroline Ellison.
As we’ve discussed at length, Vice President Kamala Harris has even shown support for cryptocurrency.
Beyond crypto circles, Silvergate’s closure spotlights the tug-of-war between regulators and banks. Federal bodies’ power to label practices as “unsafe” could smother innovation and competition.
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Final Thoughts: Navigating A Tense Regulatory Landscape
As Silvergate shuts its doors, the crypto sector confronts the impact of what many view as stifling regulatory blows.
Moving forward means finding a sweet spot where rules protect without smothering the vitality of digital finance.
Nobody wants another FTX.
Yet we also can’t wait for Operation Chock Point 2.0 to be gone in November (shoutout to Wyclef Jean).
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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