In a recent development, a crypto investor jabbed Senator Elizabeth Warren for criticizing Silvergate bank. Warren shared a Twitter post, reacting to the recent collapse of the bank and reminding the crypto community of her earlier warnings.
But the founder of Galaxy Digital, Mike Novogratz, responded to Warren’s posts with sarcasm, mentioning her so-called intelligence and calls for regulators to step up against crypto risk.
Novogratz Reacts Against Senator Warren
In Warren’s post, the senator that “As the bank of choice for crypto, Silvergate Bank’s failure is disappointing but predictable. I warned of Silvergate’s risky, if not illegal, activity—and identified severe due diligence failures. Now, customers must be made whole & regulators should step up against crypto risk.”
But while responding to Warren’s post, Novogratz sarcastically called her smart, stating that she should explain Modern Monetary Theory (MMT).
Recall that Senator Warren was among the US Senators who pressed Silvergate Bank over its connection to the FTX exchange. Senator Warren from the Democratic party and Senators John Kennedy and Roger Marshall from the Republican party sent a letter to the bank to determine if it knew about the misuse of funds belonging to FTX customers.
The lawmakers sent the letter after Silvergate gave them an allegedly evasive and incomplete response to a prior letter on December 5, 2022.
Apart from these lawmakers, Silvergate was also under the investigation of the U.S. Department of Justice for its alleged dealings with Alameda Research and FTX, two companies linked to Sam Bankman-Friend.
A class action suit against the bank in the California Southern District Court was also linked to the FTX issue, where plaintiff Joewy Gonzalez accused the bank of aiding the fraud FTX committed against its customers.
These issues and more seemingly support Warren’s warnings about the risks in the crypto industry and the senator has been a strong anti-crypto soldier who constantly calls for more regulation in the industry. A report by Politico disclosed that Warren is building an army to fight against the crypto industry.
This is mainly why; Novogratz disagreed with her comments about the importance of regulation against crypto risk stating that she didn’t understand what crypto means, especially Bitcoin.
Is Silvergate Failure Another Result Of FTX Collapse?
The crash of FTX affected many crypto investors and firms. As the year gradually unfolds, more implosion effects continue to emerge.
Silvergate bank was linked to the exchange and its sister company Alameda Research and has faced several investigations and lawsuits due to its dealings with SBF and FTX.
On March 8, Bloomberg reported that Silvergate Capital Corp. plans to shut down and liquidate its bank due to loss of funds stemming from the crypto market crash, which the bank confirmed.
The bank’s statement reads:
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind-down of bank operations and a voluntary liquidation of the bank is the best path forward.”
Notably, after the announcement, the bank’s share price crashed to $2.30 after reaching a high of $220 in November 2021.