Silvergate CEO Claims Biden Pressure Led to Bank Closure

Former Silvergate Bank CEO Alan Lane claims that political and regulatory pressure from the Biden administration led to the bank's voluntary wind-down in 2023. He argues that Silvergate remained solvent despite a deposit run, citing its ability to satisfy withdrawals equivalent to 70% of its demand deposits during the fourth quarter of 2022.

Lane claims that a 'coordinated attack by the Biden Administration' led to the bank's liquidation, saying it chose wind-down 'in the face of political pressure.' He notes that Silvergate held liquid assets that could be sold or pledged as collateral during periods of heavy withdrawals. In January 2023, the bank reported a $718 million loss after selling $5.2 billion of debt securities and recording a significant decline in digital asset deposits.

Lane's account differs from federal findings that attributed Silvergate's liquidation to its concentrated deposit base, funding risks, and weaknesses in governance and compliance. Regulators cited risk management and compliance failures, but Lane disputes the claim that Silvergate's anti-money laundering (AML) controls failed, pointing out that no regulator had proven this.

The controversy surrounding Silvergate's closure highlights ongoing concerns about government agencies' treatment of crypto companies. In 2023, interagency statements urged banks to take a cautious approach to crypto-related activities, although the Fed maintained that institutions were neither prohibited nor discouraged from serving any specific customer class.