Alan Lane says regulators forced Silvergate bank shutdown
- Silvergate survived an $8B deposit run by liquidating $5B in Treasuries while remaining solvent.
- Regulators pressured banking partners to cut ties, forcing a solvent bank to shut down.
Silvergate Bank didn't die from bad loans or unpayable debts.
When FTX collapsed in November 2022, panicking crypto clients pulled 70 percent of their deposits within weeks. Former CEO Alan Lane disclosed on What Bitcoin Did with host Danny Knowles that the bank survived the $8 billion run by liquidating $5 billion in short-duration Treasuries and cash reserves. Silvergate absorbed $700 million in realized losses, fully paid off its Federal Reserve discount window loans, and honored every customer withdrawal without needing a government bailout.
By January 2023, Silvergate laid off 40 percent of its workforce to adapt to its reduced $5 billion deposit base. Business officer Ben Reynolds had built the Silvergate Exchange Network into a 24/7 institutional payment rail that continued operating smoothly. The balance sheet held, proving that a solvent bank tailored for digital assets could weather extreme market panic.
Federal regulators had already targeted Silvergate long before the FTX collapse. In early 2021, the bank partnered with Meta's Diem Association to issue a bank-backed stablecoin, drawing immediate opposition from the President's Working Group on Stablecoins. Silvergate bought Diem's underlying technology outright in January 2022, placing the institution directly in Washington's regulatory crosshairs.
After the deposit run cleared, watchdogs turned to backdoor pressure. Federal agencies signaled counterparties and banking partners to sever business ties with Silvergate. On What Bitcoin Did, Lane described a coordinated campaign mirroring Operation Choke Point, the controversial Obama-era initiative that cut off debanking targets like payday lenders and online gambling firms from payment rails.
Deprived of banking partners despite holding full capital reserves, management surrendered to political reality in March 2023. Silvergate entered voluntary liquidation not because it ran out of money, but because federal officials refused to allow a crypto-focused bank to exist inside the regulated system.
Washington proved that solvency offers no protection when regulators decide you shouldn't exist.