In a recent statement, Kate Fraher, the former chief risk officer of Silvergate Bank, has openly disputed the official narrative surrounding the bank’s closure and her settlement with the U.S. Securities and Exchange Commission (SEC). Fraher asserted that regulators never actually demonstrated that the bank’s anti-money laundering measures were flawed. She explained that she resolved the SEC’s claims to escape a prolonged legal struggle, not because the accusations were valid.
Fraher’s remarks come shortly after the SEC, now under Chair Paul Atkins, eliminated its long-standing policy that prevented settling defendants from publicly denying the agency’s allegations. This policy, in effect since 1972, had drawn criticism for silencing defendants. Fraher described this change as allowing her to finally speak the truth about her case. She stressed that the SEC’s process is designed to exert maximum pressure and has real human consequences, noting that she personally experienced being “de-banked” and had her own credit lines revoked during the investigation.
The SEC had sued Silvergate, Fraher, and former CEO Alan Lane in July 2024, accusing them of misleading investors about the bank’s compliance with anti-money laundering rules, particularly concerning transactions linked to FTX. The SEC claimed Silvergate missed roughly $9 billion in suspicious transfers. Under the settlement, Silvergate paid a $50 million civil penalty, Lane paid $1 million, and Fraher paid $250,000 plus accepted a five-year ban from serving as an officer or director of a public company. Former CFO Antonio Martino is still fighting the charges.
Contrary to the widely held belief that Silvergate’s collapse was triggered by FTX’s downfall in 2022, Fraher maintained that the bank remained operationally sound after restructuring in early 2023. Even after a 70% deposit outflow following FTX’s bankruptcy, she argued that Silvergate kept appropriate capital levels and reduced staff to continue safely. Instead, she attributed the bank’s liquidation to intense pressure from U.S. financial regulators and policymakers, which made its business model unsustainable. This echoes claims from crypto industry figures who referred to the situation as “Operation Chokepoint 2.0,” an alleged campaign to cut off crypto companies from the banking system.
Venture capitalist Nic Carter had previously reported that Silvergate insiders described informal regulatory demands to slash crypto-related deposits to just 15% of total liabilities. Carter argued that the bank’s voluntary liquidation, rather than a forced FDIC receivership, suggested it was pushed toward closure by supervisory pressure, not insolvency. He linked Silvergate’s failure to the subsequent collapses of Signature Bank and Silicon Valley Bank during the 2023 regional banking crisis, noting that scrutiny on crypto-focused banks intensified after FTX, even without proven criminal wrongdoing related to Silvergate’s ties to FTX.
Fraher praised SEC Chair Atkins and Commissioner Hester Peirce for ending the gag order, which she called unconstitutional. Peirce has also criticized the policy, arguing that it undermines transparency and investor protection. In a recent statement, she emphasized that both regulators and defendants should be free to discuss enforcement cases openly after settlements are reached.