Silvergate Forced to Liquidate Due to Government Pressure – Reports

In December 2022, the crypto sector faced its darkest hour, Silvergate — one of the most significant crypto banks in the US — found itself on the brink.

The media company Pirate Wires tracked the movement of Silvergate year by year.

It revealed that in March 2023 the bank announced its voluntary liquidation, marking an end to a pioneering institution in the digital asset space. Mainstream narratives attributed this downfall to market forces and potential ties to criminal activities. However, new evidence suggests a more sinister influence: regulatory pressure from the Biden administration, as per the X post.

People portrayed Silvergate’s demise as an inevitable consequence of its bet on a volatile industry. The Government Accountability Office and mainstream financial media argue that the bank succumbed to a credit crunch. It led to mass withdrawals. This was possibly exacerbated by connections to Sam Bankman-Fried’s fraudulent FTX exchange.

A Different Story Emerges

However, recent bankruptcy filings and exclusive interviews with confidential sources paint a different picture. These revelations suggest that it was not the broader crypto downturn but direct pressure from Biden administration officials that forced Silvergate into liquidation. Specifically, regulators allegedly issued an unwritten mandate for the bank to cap its crypto deposits at 15%. That further rendered its business model untenable.

image showing a screenshot saying that Silvergate was forced to liquidate — Courtesy: Pirate Wires

New documents and sources indicate that Silvergate was robust enough to weather the initial storm. After successfully navigating its 2022 bank run, its deposits increased quarter over quarter. By 2024, the balance sheets of crypto firms had recovered strongly in the U.S..

In 2023, Silvergate shut operations and liquidated after a market meltdown. “In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward,” CNBC reported.

The report also mentioned that the company has faced significant challenges in recent months. After cutting 40% of its workforce in January, it reported a nearly $1 billion net loss in the fourth quarter. This was driven by a sharp 68% drop in customer deposits, which fell to $3.8 billion by year’s end. To meet the surge in withdrawals, Silvergate sold $5.2 billion in debt securities.

In conclusion, Pirate Wire’s post highlights that the collapse of Silvergate raises serious concerns about the Biden administration’s stance on the domestic crypto industry. It prompts the question: was this an intentional effort to suppress a growing sector? Furthermore, it speculates whether the regulatory pressure on Silvergate may have triggered the broader regional banking crisis of early 2023.

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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