The recent events involved a crypto investor mocking Senator Elizabeth Warren for her criticism of Silvergate bank.
Following the current bank failure, Warren posted on Twitter, reacting to the news by referencing her previous warnings to the cryptocurrency community.
Mike Novogratz, the founder of Galaxy Digital, responded sarcastically to Warren’s tweets, mocking her “knowledge” and her demand that authorities do more to curb crypto-related risks.
Reactions to Senator Warren from Novogratz
In Warren’s post, the senator claimed (1), “As the bank of preference for crypto, Silvergate Bank’s failure is regrettable but anticipated. I forewarned against Silvergate’s potentially hazardous and even unlawful operations and pointed out major holes in their due diligence. Regulators should take action against crypto risk, and compensation must be provided to clients.
In response to Warren’s article, Novogratz sarcastically dubbed her brilliant and advised her to explain modern monetary theory (MMT).
She’s just so smart 😉 Ask her about MMT! Seems like a brilliant idea. $BTC couldn’t ask for a better partner! https://t.co/oqy34NGdC8
— Mike Novogratz (@novogratz) March 9, 2023
Remember that Senator Warren was one of the U.S. Senators who questioned Silvergate Bank about its ties to the FTX exchange.
Democratic Senator Elizabeth Warren, together with Republican Senators John Kennedy and Roger Marshall, wrote to the bank to inquire into the possible exploitation of FTX clients’ assets.
Lawmakers allegedly received an evasive and insufficient response from Silvergate on December 5, 2022, prompting them to write the current letter.
In addition to the scrutiny from these representatives, Silvergate was also the subject of an inquiry by the U.S. Department of Justice into its purported business relationships with Alameda Research and FTX, two companies having ties to Sam Bankman-Friend.
The FTX controversy was also at the center of a class action lawsuit filed against the bank in California’s Southern District Court by plaintiff Joewy Gonzalez, who claimed the bank had assisted FTX in committing fraud against its clients.
These problems, and others, lend credence to Senator Warren’s concerns about the crypto business, and she has been a vocal opponent of cryptocurrencies who has repeatedly called for greater government oversight.
Novogratz disagreed with her definition of crypto and Bitcoin and said she didn’t comprehend the need for regulation to protect against crypto risk.
Did Crypto Winter Collapse Silvergate?
FTX’s collapse impacted many crypto-related businesses and investors. More and more implosion consequences are manifesting themselves as the year progresses.
Investigations and lawsuits have been filed against Silvergate Bank because of its involvement with SBF and FTX, linked to the exchanges, and its sister business, Alameda Research.
After suffering losses in the recent cryptocurrency market crisis, Silvergate Capital Corp. announced on March 8 that it would be closing and liquidating its bank.
From the bank’s official statement:
“Considering recent developments in the industry and regulatory framework, Silvergate considers that an orderly wind-down of bank activities and a voluntary dissolution of the bank is the best course forward.”
Once the news broke, the bank’s share price significantly plummeted from its all-time high of $220 in November 2021 to a current level of $2.30.