- Crypto lawyer described US asset regulators as anti-crypto thugs.
- Senator Brown blamed Silvergate Bank’s insolvency on crypto’s volatility.
- A crypto enthusiast argued Silvergate’s case was user deposit mismanagement.
In a recent tweet, crypto lawyer John Deaton expressed frustration with the US regulatory authorities, who he believes are intentionally promoting a false narrative about the crypto industry. Deaton described them as “anti-crypto incumbent protecting regulatory thugs” while reacting to a comment by Senator Sherrod Brown.
Senator Brown was quoted in a widely shared screenshot blaming Silvergate Bank’s insolvency on crypto’s volatility. “We’re seeing what can happen when a bank is over-reliant on a risky, volatile sector like cryptocurrencies,” the statement read.
The crypto lawyer Deaton argued that the authorities are not interested in the truth but in promoting a false narrative that suits their agenda of obstructing crypto adoption. He believes the only way to combat these negative narratives is to continue presenting factual information about cryptocurrencies.
Notably, the CEO of CustodiaBank, Caitlin Long, countered the arguments of Senator Brown with factual information. Long asserted that Silvergate Bank’s insolvency was caused by a discrepancy between demand deposits and available cash, which is not related to crypto.
The CustodiaBank CEO buttressed that Silvergate had $13.3 billion in demand deposits but only had $1.4 billion of money on hand. “Had Silvergate held $13.3 billion of cash, the bank run would not have impaired its capital,” Long concluded.
Last Thursday, the share price of Silvergate plummeted by nearly 50% after fresh revelations about its exposure to the bankrupt FTX crypto exchange prompted questions regarding the bank’s ability to recover. Consequently, the USDC stablecoin issuer moved its leftover reserve deposits held at the troubled bank to its other banking partners.