Venture Capitalist Nic Carter updates his findings on Operation Choke Point 2.0 after Silvergate executive’s testimony that sheds light on how US financial regulators tried to crackdown on banks involved in the crypto industry, known as Operation Choke Point 2.0.

In his thread, Carter makes corrections to his widely cited original report from 2023, that it was not the Federal Deposit Insurance Corporation who was responsible for sending out the message that banks had to cut their crypto deposits by 15%.

Instead, in fact, it was the San Francisco Fed that gave out this order for banks in the region, affecting major crypto-related banks like Silvergate, Signature Bank and Silicon Valley Bank.

In a series of tweets published on X Sept. 20, Carter cites a declaration from Elaine Hetric, former chief administrative officer of Silvergate, the California bank that provided cryptocurrency services. These new revelations, according to Carter, contain proof that pressure from Federal Bank Regulatory Agencies to curtail their crypto-dealings led to Silvergate bank going bankrupt.

According to Carter, Hetric’s statement supports his reporting on Operation Choke Point 2.0, a series of initiatives the U.S. federal government deployed to curtail crypto financial transactions.

He notes that this is the first time an executive from the now-bankrupt Silvergate has gone on record about Biden bank regulator’s efforts to discourage banks from dealing with crypto, suggesting:

Carter goes on to explain how the public has been led to believe that Silvergate went bankrupt due to losses from their crypto depositors and allegations of FTX-related fraud. When in fact, Silvergate survived the fall and was cleared from all charges. These new points underscore Carter’s broader thesis that the Democratic Party under the Biden administration has worked to retroactively curtail the crypto industry as it on-ramped to traditional financial institutions like banks.

Instead, Carter states that the US government’s efforts to discourage banks from dealing in digital assets is what led to Silvergate’s downfall.

“Silvergate was a boutique crypto bank that served the crypto industry. so after the Fed came out with this new informal guidance, their business ceased to exist, and they voluntarily liquidated.”
Nic Carter

Even after Silvergate and SVB went bankrupt, they could not sell any of their digital assets because any crypto related lines of business would be deemed null according to the Office of the Controller of the Currency. These assets included the cryptocurrency Sentient Coin and Signature Bank’s failed cryptocurrency payment network Signet, as well as other crypto deposits made at those banks.

What is Operation Choke Point 2.0?

Operation Choke Point 2.0 is a term used to describe how US financial regulators coordinated a plan across multiple agencies to discourage banks from doing business with crypto firms.

Government bodies like the Fed, FDIC, and OCC issued statements that highlighted the risks that banks face if they deal in cryptocurrency.

Although it was not explicitly prohibited, this led to financial institutions refusing to work with cryptocurrency. As a result, banks that dealt mainly in cryptocurrency suffered significant losses.

A few examples cited by Carter include the Metropolitan Commercial Bank’s decision to close their cryptocurrency department, Binance’s suspension of U.S. dollar bank transfers for retail clients, and the investigation into Silvergate’s management of accounts related to the crypto trading firm Alameda Research.

“These banks did not die by suicide but by murder,” Carter claimed. “This remains a gigantic scandal and no one has ever faced any responsibility for it.”



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