March 23, 2023

Crypto Blamed for Silvergate Bank Liquidation

Elizabeth Warren, a senator from Massachusetts, tweeted about the liquidation of Silvergate Bank shortly after it was announced. She expressed disappointment at the bank’s failure, which she believed was expected, and again labeled cryptocurrencies unsafe.

Elizabeth Warren, a U.S. Senator from Massachusetts, tweeted that she had warned of Silvergate Bank’s risky and potentially illegal activities and had identified severe due diligence failures.

She called for customers to be reimbursed and regulators to act against crypto risk. However, her statement was immediately criticized, with one person accusing her of causing a bank run with false accusations and engaging in mental gymnastics by claiming she predicted it.

The criticism directed at Elizabeth Warren regarding the Silvergate bank run appears to be linked to a letter she co-wrote with Senators John Kennedy and Roger Marshall, in which they made a series of accusations and requested information on what they referred to as a “massive cryptocurrency scandal.”

In response to Warren’s tweet on March 9, an individual asked if she had ever managed to avoid making egregious accusations while remaining well-informed. According to some critics, Elizabeth Warren’s position on Silvergate Bank and cryptocurrencies is an example of the age-old propaganda technique of blaming objects rather than businesses or individuals for failure.

This method is comparable to blaming weapons for violence or a pencil for a hateful letter rather than acknowledging the role of the individuals using these objects. Many Twitter users criticized Warren for this view. However, Crypto CFA Ram Ahluwalia offered a different viewpoint on the Silvergate situation in response to Warren’s allegations.

Ram Ahluwalia, a crypto CFA, argued that the downfall of Silvergate Bank, which was the first crypto bank, was caused by a bank run fuelled by a loss of public trust in the institution. Despite accusations regarding Anti-Money Laundering practices, Ahluwalia believed these were not the ultimate cause of the bank’s collapse.

He added that supervising banks is the duty of the Executive Branch, but this approach was declined. Instead, ram Ahluwalia argues that a letter from a senator, which gained traction on social media, played a significant role in eroding public trust in Silvergate Bank and ultimately led to a crisis of confidence that contributed to the bank’s downfall.

Crypto Investors Might Lose Big

According to reports, President Joe Biden plans to address a tax loophole utilized by cryptocurrency investors in his proposed 2024 budget. This move is part of his efforts to reduce the country’s deficit by several trillions of dollars.

As per a report in The Wall Street Journal, President Joe Biden is expected to propose changes to the tax treatment of cryptocurrency transactions. Currently, investors can sell their cryptocurrency investments at a loss, claim the losses on their taxes, and immediately buy back the same assets.

This action is a tax loophole that Biden is reportedly targeting to raise revenue and address the country’s deficit. President Joe Biden proposed changes to the tax treatment of crypto transactions after the cryptocurrency market experienced a significant downturn last year, commonly called crypto winter.

Last year, Bitcoin’s value fell by over 60%, and the overall valuation of the cryptocurrency market dropped below a trillion dollars after surpassing three trillion dollars in 2021. The market’s downturn led to significant losses for many cryptocurrency investors, which the tax loophole currently exploited allows them to claim as losses on their taxes.

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