Did Washington Crush Crypto’s Most Important Bank? Its Former Chairman Says Yes.

Did regulators intentionally shut down Silvergate Bank to cut off crypto from the financial system? Silvergate’s former chairman says it was no accident.

Silvergate Bank was once crypto’s most important banking partner, handling billions in deposits from the biggest players in the industry. Then, FTX collapsed—and everything changed.

In this episode of Unchained, Mike Lempres, former chairman of Silvergate, talks about how Silvergate grew into a banking giant for crypto, why Washington suddenly turned against them—even after they survived the FTX crisis, and whether Operation Choke Point 2.0 was real.

Plus, did short sellers and politicians work together to tank Silvergate’s stock? And what does the future look like for banks that want to serve crypto?

This is part of the inside story of one of the biggest banking collapses in crypto history.

Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform.

Now, let’s get into this week’s news! In today’s edition:

• 📉 Ethereum crashes 27% on Trump’s tariff shock—then rebounds as the White House presses pause.

• 🪙 Ethereum’s supply surges back to pre-Merge levels—is “ultrasound money” at risk?

• 🏦 Trump’s Bitcoin reserve? His administration is exploring a national BTC stash.

• 🚨 XRP Ledger freezes for an hour—validators failed to reach consensus, sparking debate.

• ⚖️ SEC scales back crypto enforcement—a major shift in regulatory strategy.

• 💰 FTX’s Bahamas unit begins repayments—creditors under $50K get 100% + interest.

• 🔍 Coinbase users lost $300M to scams last year—ZachXBT sounds the alarm.

• 🚀 MicroStrategy rebrands to ‘Strategy’—because it’s all about Bitcoin now.

• 😂 SEC crypto litigator moved to IT—from subpoenas to server crashes.

Ethereum Plunges 27% on Trump Tariffs, Then Recovers

Ethereum experienced its biggest intraday drop since 2021, plunging 27% on Monday, as a wave of selling hit the crypto market following U.S. President Donald Trump’s announcement of new tariffs on Canada, Mexico, and China. Bitcoin also dropped 6% to around $93,000, while the global crypto market saw $400 billion wiped out in a single day. Liquidations across major exchanges totaled $2.27 billion, with Ethereum alone accounting for $616 million in forced sell-offs.

The sell-off was the largest single-day liquidation event in the history of crypto. 

However, the market rebounded sharply on Tuesday after Trump agreed to pause the tariffs for 30 days following discussions with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum. Bitcoin surged back above $102,500, while Ethereum recovered 18% to an intraday high of $2,919.

Despite the relief rally, tensions remain as China responded with retaliatory tariffs, and European leaders brace for further trade actions from the U.S., signaling continued market volatility ahead.

Ethereum’s Supply Returns to Pre-Merge Levels

Ethereum’s token supply has climbed back to levels last seen before The Merge in 2022, raising concerns about the network’s deflationary model. According to data from ultrasound.money, Ethereum’s total supply now stands at 120.5 million ETH. 

This shift marks a reversal from the deflationary trend Ethereum had maintained since transitioning to proof-of-stake, and analysts point to last year’s Dencun upgrade as a primary factor behind the change.

The Dencun upgrade, implemented in March 2024, introduced blob transactions, a mechanism designed to enhance Ethereum’s scalability by efficiently handling large data payloads, particularly for layer 2 solutions. However, this upgrade also altered how transaction fees are burned. 

Ethereum researcher Justin Drake acknowledged that supply has been growing at 0.5% per year, driven by 1% yearly issuance minus 0.5% in burns. Still, he remains optimistic that Ethereum will regain its deflationary status, stating, “To become ultrasound again, either issuance has to decrease or the burn has to increase. I believe both will happen.”

If Ethereum’s supply continues to expand without sufficient fee burns, it could weaken its position as a store of value, a key factor in the “ultrasound money” narrative that has differentiated  ether from the tokens of most other smart contract blockchains.

Meanwhile, Ethereum validators have been signaling support for an increase in the network’s gas limit, with the threshold recently surpassing 34 million gas units for the first time since 2021. The gas limit determines the maximum amount of computational work that can be included in a block, and increasing it allows for more transactions per block, reducing congestion and lowering fees.

Report Alleges Trump-Backed Crypto Platform Offered ‘Token Swap’ Deals

A new report from Blockworks claims that World Liberty Financial (WLFI) — the crypto project backed by President Trump and his family — has been offering blockchain teams “token swap” deals as a way to build its treasury. 

According to sources cited in the report, WLFI representatives have approached crypto projects with a proposal: if they buy at least $10 million worth of WLFI tokens, the platform will purchase an equal amount of the project’s native token. Additionally, the report states that priority treatment was promised to projects willing to commit at least $15 million.

WLFI, which is expected to launch later this year with a $1.5 billion fully diluted valuation, has already sold 24 billion tokens at $0.05 each, totaling an estimated $1.2 billion, according to its website. The platform aims to help users interact with decentralized finance (DeFi) applications but currently only offers the option to purchase its token.

Despite the report, crypto projects linked to WLFI’s treasury have denied any formal token swap agreement. TRON, whose TRX token is among WLFI’s largest holdings, rejected the claim, with a spokesperson telling CoinDesk, “There is no token swap agreement.” Similarly, Movement Labs, whose MOVE token is also held in WLFI’s treasury, said its inclusion resulted from market purchases rather than any pre-arranged deal. Movement Labs co-founder Rushi Manche emphasized, “There weren’t any deals—any backdoor deals. It was purely just market buying.”

XRP Ledger Suffers Hour-Long Halt

The XRP Ledger (XRPL) experienced a 64-minute outage late Tuesday, reigniting debate over the strengths and weaknesses of its consensus mechanism. The network paused transaction processing as validators failed to reach agreement, a feature designed to prevent double-spending and inconsistencies.

Supporters argued the halt was an expected safety measure, with Daniel Keller, chief technology officer of blockchain infrastructure firm Eminence, telling The Block that “pausing until a solution is found is one of the tradeoffs.” However, critics pointed to the small number of trusted validators as a possible weakness, noting other blockchain networks such as Ethereum and Bitcoin rely on much larger validator sets.

Ripple’s chief technology officer David Schwartz assured users that no funds were lost, explaining that while validator operators attempted to resolve the issue, the network may have “spontaneously recovered” on its own as only a few Unique Node List validators actually made any changes.

Trump Administration Weighs National Bitcoin Reserve

President Trump has tasked his administration’s crypto and AI czar, David Sacks, with evaluating the feasibility of a U.S. strategic bitcoin reserve. Speaking at a press conference in Washington, Sacks confirmed that assessing such a reserve is one of the administration’s first priorities, though the working group assigned to digital assets is still awaiting final cabinet confirmations.

“We’re still waiting for some of those cabinet secretaries … but that’s one of the first things we’re going to look at,” Sacks said.

The move comes as some U.S. states, including Utah, advance legislation to establish state-level bitcoin reserves, positioning digital assets as part of broader financial strategies.

While some analysts speculate that bitcoin could be included in Trump’s newly announced sovereign wealth fund, Sacks clarified that the fund is a separate initiative, with Commerce Secretary nominee Howard Lutnick handling that effort.

SEC Reduces Crypto Enforcement Unit

The U.S. Securities and Exchange Commission (SEC) is downsizing its crypto enforcement unit, reassigning dozens of lawyers previously focused on digital asset cases, according to multiple reports. The move comes as part of President Trump’s push to scale back regulatory oversight in the crypto industry.

The SEC’s crypto enforcement unit, which expanded under former Chair Gary Gensler, is now seeing many of its 50 members reassigned, with some lawyers reportedly calling the shift an unfair demotion. Meanwhile, acting SEC Chair Mark Uyeda has established a new internal task force to review the agency’s crypto policies.

SEC Commissioner Hester Peirce, a longtime crypto advocate, will lead the new initiative. “It took us a long time to get into this mess, and it is going to take us some time to get out of it,” said Peirce, emphasizing the need for a clearer regulatory framework. The task force’s first goal is to determine where crypto assets fall under securities laws.

FTX’s Bahamas Unit to Begin Creditor Repayments on Feb. 18

FTX Digital Markets, the Bahamian arm of the collapsed crypto exchange, will begin repaying its first group of creditors on Feb. 18, marking a significant step in the long-running bankruptcy process.

According to a distribution notice, creditors with claims of $50,000 or less — categorized as “convenience class” creditors — will receive full reimbursement of their adjudicated claims, along with 9% annual interest dating back to November 2022.

The repayment process is being facilitated by BitGo, though it remains unclear if Kraken, another exchange assisting in FTX’s payout process, will follow the same schedule. PwC, the appointed liquidator for FTX Digital Markets, has stated that creditors with larger claims will receive payments in the second quarter of this year.

Coinbase Users Lose $300 Million Annually to Scams, Says ZachXBT

Crypto investigator ZachXBT has revealed that Coinbase users collectively lose over $300 million each year to social engineering scams, with $65 million lost between December and January alone. The scams allegedly typically involve fraudsters impersonating Coinbase support, using spoofed phone numbers and stolen personal data to gain victims’ trust before convincing them to transfer funds to fraudulent wallets.

“For the vast majority of the time, these theft addresses are not being reported at all by Coinbase in popular compliance tools, even after the thefts went on for weeks,” ZachXBT wrote, noting that other major exchanges do not have the same issue.

The investigator also outlined several security improvements Coinbase could implement including making phone number inputs optional, creating restricted account types for new users, and enhancing scam prevention education.

MicroStrategy Rebrands to ‘Strategy’ Amid Deepening Bitcoin Focus

MicroStrategy has officially rebranded as Strategy, reflecting its stronger commitment to Bitcoin as the company’s core business. The name change, announced Wednesday, is described as a “natural evolution”, emphasizing its position as the largest corporate holder of bitcoin. The rebrand comes with a new logo featuring Bitcoin’s iconic “B” and a shift in branding colors to orange, further cementing its crypto-first identity.

Alongside the rebranding, Strategy reported its fourth consecutive quarterly loss, largely due to a $1.01 billion impairment charge on its bitcoin holdings. The company acquired 218,887 BTC in the last quarter, bringing its total to 471,107 BTC, valued at approximately $46 billion as of Feb. 6.

Fun Bits: From Crypto Courtroom to IT Help Desk

Jorge Tenreiro, the SEC’s former deputy chief of crypto enforcement, has reportedly been reassigned to the agency’s IT department, proving once and for all that career paths can be nonlinear… or just completely random.

After years of chasing down Ripple, Coinbase, and every token with a suspicious logo, Tenreiro may now be chasing down forgotten passwords and rebooting routers. Reports indicate he’s already working on his biggest case yet: The Mystery of the Office WiFi That Never Works.

Watch the weekly recap on YouTube!