Crypto Czar David Sacks Gives Take On Operation Chokepoint 2.0

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As a seasoned researcher with a keen interest in the dynamic intersection of finance, technology, and regulation, I find the ongoing discourse surrounding Operation Chokepoint 2.0 both intriguing and concerning. The recent insights from Chris Lane, former CTO of Silvergate Bank, provide a compelling narrative that underscores the potential implications of regulatory actions on innovative business models.

Discussions about Operation Chokepoint 2.0 have shifted direction following comments from the incoming Crypto Czar, David Sacks, who believes the accusations should be investigated further. This latest discourse on X began when Chris Lane, a former Chief Technology Officer at Silvergate Bank, shared his insights as to why the bank collapsed.

Operation Chokepoint 2.0 Is Universal

As per Lane’s explanation, it was not the involvement with FTX Derivatives Exchange that led to Silvergate’s downfall; rather, it was the regulatory action taken by American authorities. Notably, these regulators targeted five US banks just a day after the Thanksgiving holiday in 2022.

According to Lane’s statement, Silvergate withstood a massive 70% withdrawal of deposits following the fall of FTX. In comparison, a conventional bank might not have been able to endure a mere 20% withdrawal, highlighting the substantial strength of Silvergate’s reserves.

Nevertheless, he pointed out that “regulatory bodies intervened around Spring 2023, restricting significantly the US dollar deposits we could maintain for our digital asset customers.” Given that their operations heavily rely on this model, he stated that the bank was forced to shut down as a result.

Silvergate, an innovative American business in the banking sector, abruptly halted operations and redirected efforts towards returning capital to its shareholders. However, unexpectedly, regulators seemed to play a deceptive game – while we were moving forward, they suddenly caught us off guard with their actions,” Lane stated in his recent 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.

— David Sacks (@DavidSacks) December 7, 2024

After being appointed as White House AI and Crypto Czar by Donald Trump, this is the first clear comment that Sacks has made about the subject.

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.

After becoming President, Donald Trump has chosen individuals supported by the crypto industry for key positions. For instance, he appointed Scott Bessent as Treasury Secretary. Furthermore, in a move that was yet to come into effect at the time, he designated Paul Atkins as the future Chairman of the Securities and Exchange Commission (SEC).

The newly appointed government officials have a positive stance towards cryptocurrencies, and experts predict that their policy approaches will be more advantageous for developing countries.

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2024-12-07 22:20