{"id":602967,"date":"2026-05-21T21:15:00","date_gmt":"2026-05-21T21:15:00","guid":{"rendered":"https:\/\/Blockchain.News\/news\/silvergate-exec-sec-settlement-gag-rule"},"modified":"2026-05-21T21:15:00","modified_gmt":"2026-05-21T21:15:00","slug":"ex-silvergate-exec-slams-sec-over-forced-aml-settlement","status":"publish","type":"post","link":"https:\/\/e-bitco.in\/index.php\/2026\/05\/21\/ex-silvergate-exec-slams-sec-over-forced-aml-settlement\/","title":{"rendered":"Ex-Silvergate Exec Slams SEC Over Forced AML Settlement"},"content":{"rendered":"
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James Ding<\/a> May 21, 2026 21:15<\/span> <\/p>\n

Former Silvergate CRO Kate Fraher criticizes SEC’s tactics in AML case after gag rule repeal, sheds light on crypto banking challenges.<\/p>\n

\"Ex-Silvergate <\/a> <\/figure>\n

Former Silvergate Bank executive Kate Fraher has publicly criticized the SEC<\/a> over what she described as coercive tactics that pushed her into settling an anti-money laundering (AML) charge in 2024. Her remarks come just days after the SEC formally rescinded its controversial 50-year-old ‘gag rule,’ which had barred defendants from denying allegations after settling enforcement actions.<\/p>\n

Fraher, who served as the bank\u2019s chief risk officer, disclosed that her $250,000 civil penalty and five-year ban from serving as an executive or board member were the result of a settlement designed to avoid a lengthy \u201cmulti-year battle\u201d in court. \u201cThe process itself is designed to apply maximum pressure,\u201d she said, revealing that she had been de-banked and had credit lines closed during the investigation\u2014tactics she claimed were meant to disrupt her daily life.<\/p>\n

Silvergate, once a prominent crypto-friendly bank, voluntarily shut down operations in 2023 following the collapse of FTX and increasing regulatory scrutiny. Fraher rejected the narrative that a \u201cbank run\u201d or market volatility tied to FTX\u2019s implosion led to Silvergate\u2019s closure. Instead, she attributed the wind-down to what she called \u201cbroader administrative and regulatory pressure\u201d on the digital asset industry, which she argued made it impossible to sustain a viable business.<\/p>\n

Gag Rule Repeal Opens the Door<\/h2>\n

Fraher\u2019s ability to speak out stems from the SEC\u2019s decision on May 18, 2026, to rescind Rule 202.5(e), known as the ‘gag rule.’ Introduced in 1972, the rule required settling defendants to agree not to publicly deny the SEC\u2019s allegations, effectively silencing them for life. The policy faced mounting criticism for violating the First Amendment, culminating in a legal challenge led by the New Civil Liberties Alliance. The SEC\u2019s reversal has been hailed as a landmark shift in regulatory policy, with current SEC Chairman Paul Atkins stating that criticism of government agencies is a fundamental American right.<\/p>\n

Fraher applauded the repeal, calling the gag rule an \u201cunconstitutional policy\u201d that unfairly restricted individuals from telling their side of the story. \u201cI am glad the right to speak the truth has finally been restored,\u201d she said. However, she also emphasized the lasting personal and professional toll of regulatory enforcement actions, urging broader discussion on the issue.<\/p>\n

Operation Chokepoint 2.0?<\/h2>\n

Fraher\u2019s comments add to growing speculation about whether U.S. regulators have purposefully targeted crypto firms through aggressive enforcement actions and restricted access to banking services. Dubbed \u201cOperation Chokepoint 2.0\u201d by industry insiders, the alleged strategy mirrors a controversial 2013 initiative that pressured banks to cut ties with politically disfavored industries. In addition to Silvergate, other crypto-friendly banks like Signature Bank and Silicon Valley Bank also shuttered in 2023, affected by deposit runs and liquidity strains exacerbated by the FTX collapse.<\/p>\n

Fraher noted that by early 2023, Silvergate had stabilized its operations with appropriate capital levels and a streamlined workforce. However, she claimed the regulatory environment ultimately made it untenable to continue, underscoring the broader challenges facing crypto businesses in the U.S.<\/p>\n

What\u2019s Next?<\/h2>\n

The SEC\u2019s decision to abolish the gag rule opens the door for other executives and firms to publicly challenge the agency\u2019s past enforcement actions. For the crypto sector, Fraher\u2019s revelations highlight the increasingly fraught relationship between the industry and U.S. regulators. As scrutiny on the digital asset space continues, the next wave of enforcement actions\u2014or regulatory reforms\u2014will likely shape the future of crypto banking in America.<\/p>\n

Image source: Shutterstock<\/i><\/span> Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

James Ding May 21, 2026 21:15 Former Silvergate CRO Kate Fraher criticizes SEC’s tactics in AML case after gag rule repeal, sheds light on crypto banking challenges. Former Silvergate Bank executive Kate Fraher has publicly criticized the SEC over what she described as coercive tactics that pushed her into settling an anti-money laundering (AML) charge […]<\/p>\n","protected":false},"author":1,"featured_media":602968,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,16],"tags":[625,172,25,112,277,3013],"class_list":{"0":"post-602967","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-blockchain","8":"category-regulation","9":"tag-aml","10":"tag-crypto","11":"tag-news","12":"tag-regulation","13":"tag-sec","14":"tag-silvergate"},"_links":{"self":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts\/602967","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/comments?post=602967"}],"version-history":[{"count":0,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/posts\/602967\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/media\/602968"}],"wp:attachment":[{"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/media?parent=602967"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/categories?post=602967"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e-bitco.in\/index.php\/wp-json\/wp\/v2\/tags?post=602967"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}