Crypto Czar David Sacks Gives Take On Operation Chokepoint 2.0

Conversations around Operation Chokepoint 2.0 has taken a new twist after incoming Crypto Czar David Sacks said the allegations around the subject deserves probe. The latest conversation on X started with Chris Lane, the former CTO of Silvergate Bank giving account of why the institution failed.

Operation Chokepoint 2.0 Is Universal

According to Lane, its exposure to FTX Derivatives Exchange did not kill Silvergate, that regulators did. He noted that American regulators went after 5 US banks simultaneously the Sunday after Thanksgiving celebration in 2022.

With the collapse of FTX, Lane said Silvergate survived a 70% run on deposits. By his analysis, a typical bank would not have survived a 20% run, underscoring the depth of its excess reserve.

However, he noted that “regulators came in sometime in Spring 2023 and severely limited the amount of US dollar deposits we could hold for digital asset clients.” Considering its entire business hinges on this model, he said the bank had to close down.

“We effectively shut down the business and focused efforts on returning capital to shareholders Silvergate was an American business that pioneered a new business model in banking Regulators pulled a bait and switch – we were walking along and suddenly shot in the back,” Lane said in his X update.

He noted that of all the banks that actually offered services to FTX, Silvergate was solvent but was not allowed to thrive. Commenting on this blunt Operation Chokepoint 2.0 ordeal, the incoming Crypto Czar said it appears as though a lot of people suffered hurt by the crackdowns.

There are too many stories of people being hurt by Operation Choke Point 2.0. It needs to be looked at. https://t.co/IhCdyQfx0g

— David Sacks (@DavidSacks) December 7, 2024

Since he secured the nomination from Donald Trump as White House AI and Crypto Czar, this is the first definitive statement from Sacks on the issue.

Will Donald Trump Administration Change the Game?

It is worth noting that the first call to probe the crackdowns of Operation Chokepoint 2.0 came from pro-crypto lawyer John Deaton.

Since his election as President, Donald Trump has made crypto industry-approved appointments including Treasury Secretary Scott Bessent. The President-elect also named Paul Atkins as the next Chairman of the United States Securities and Exchange Commission (SEC).

These incoming government officials are pro-crypto and the industry expects they will approach the policies differently to favor emerging markets.