Kate Fraher, the former Chief Risk Officer of Silvergate Bank, has broken her silence, claiming that the bank's 2023 collapse was driven by regulatory pressure rather than a classic bank run. Speaking after the U.S. Securities and Exchange Commission (SEC) repealed its ‘gag rule’—a policy that previously prevented settling parties from commenting on their cases—Fraher offered a detailed rebuttal to the narrative that Silvergate failed solely due to depositor panic following the FTX collapse.
Fraher settled with the SEC in 2024, agreeing to a $250,000 civil penalty and a five-year ban from serving as an officer of any public company. In her statement, she emphasized that she settled only to avoid a ‘multi-year battle’ that carried heavy personal and professional costs, not because she admitted wrongdoing. She maintained that no financial regulator ever proved that Silvergate had deficient Anti-Money Laundering (AML) controls—a key allegation that had shadowed the bank’s final months.
Fraher acknowledged that Silvergate lost approximately 70% of its deposits in the wake of the FTX collapse in November 2022. However, she argued that by early 2023, the bank had successfully readjusted its capital reserves and staffing levels, positioning itself to continue operations. She insisted that the real obstacle was not a liquidity crisis but mounting regulatory pressure on the broader crypto industry, which made it unsustainable for Silvergate to maintain its business model. She described the personal impact, saying, ‘I was personally de-banked and had credit lines summarily closed—an aggressive tactic used to disrupt daily life and force compliance.’
Fraher’s account shifts attention toward what some industry figures have called ‘Operation Chokepoint 2.0’—an alleged effort by US financial regulators to cut crypto companies off from banking services. The collapse of Silvergate, along with Signature Bank and Silicon Valley Bank in early 2023, reshaped the landscape for crypto-friendly banking in the United States, forcing many firms to seek partners overseas. Fraher’s comments add a critical counterpoint to the prevailing narrative and underscore the ongoing debate over how aggressively regulators should police digital asset markets.
