• David Sacks calls for a closer examination of Operation Choke Point 2.0.
• Chris Lane, former CTO of Silvergate, revealed how regulators abruptly dismantled the bank’s crypto-focused business model.
• Lane described the shutdown as a “bait and switch,” citing Silvergate’s solvency before regulatory intervention.

David Sacks, the newly appointed White House Crypto Czar, has joined calls to investigate Operation Choke Point 2.0, highlighting its potential harm to the crypto industry.

Sacks voiced his concerns in a tweet on X (formerly Twitter), responding to Chris Lane, son of former Silvergate CEO Alan Lane. “There are too many stories of people being hurt by Operation Choke Point 2.0. It needs to be looked at,” Sacks wrote.

Silvergate’s Collapse Sparks Broader Concerns

Chris Lane’s post provided a firsthand account of Silvergate Bank’s shutdown. He described how regulatory actions in early 2023 dismantled the bank’s operations, which had been centered around serving digital asset clients. 

Lane described the ordeal as a “bait and switch,” recounting how the bank, which he claimed was solvent and liquid, was effectively shut down due to regulatory restrictions.

Silvergate Bank’s Legacy in Crypto

Founded in 2013, Silvergate Bank was among the first financial institutions to embrace the crypto sector. Its Silvergate Exchange Network (SEN) enabled real-time U.S. dollar transfers for institutional investors and crypto exchanges, becoming a critical part of the ecosystem.

According to Lane, SEN was a cornerstone of the cryptocurrency ecosystem, and its abrupt loss dealt a severe blow to the industry.

Lane shared that despite surviving a massive 70% run on deposits following the collapse of FTX, regulators in spring 2023 imposed severe restrictions on the bank’s ability to hold U.S. dollar deposits for digital asset clients. He argued that this move effectively killed Silvergate’s core business. “FTX didn’t kill us; our regulators did,” he said.

Operation Choke Point 2.0 and Alleged Regulatory Overreach

Critics have used the term “Operation Choke Point 2.0” to describe a targeted regulatory crackdown on the crypto industry. The original Operation Choke Point aimed at cutting off banking services to industries deemed “high-risk.” 

However, the new iteration allegedly focuses on stifling innovation in crypto by denying companies access to banking infrastructure.

Lane’s claims echo broader industry concerns that regulatory pressures have disproportionately affected crypto-friendly banks, including Signature Bank and Silicon Valley Bank. Many argue these actions jeopardize the U.S.’s leadership in blockchain technology and drive businesses offshore.

David Sacks’ call for a closer look into Operation Choke Point 2.0 reflects growing frustration among industry leaders and investors who see the crackdown as regulatory overreach. John E Deaton, a former U.S. Senate candidate, has volunteered to join Sacks in the proposed investigation.