Former Silvergate CRO Fraher settled with SEC to avoid fight

Kate Fraher, who was chief risk officer at Silvergate Bank, said she reached a settlement with the U.S. Securities and Exchange Commission in 2024 to avoid a prolonged court battle. The settlement included a $250,000 civil penalty and a five-year prohibition on serving as an executive or board director.

Fraher’s comments are her first public statements since the SEC lifted a long-standing gag rule. She said no financial regulator had shown that Silvergate’s anti-money-laundering controls failed and that she accepted the settlement to move on rather than endure years of litigation.

She described the enforcement process as applying “maximum pressure” on individuals and outlined personal consequences she faced. “I was personally de-banked and had credit lines summarily closed-an aggressive tactic used to disrupt daily life and force compliance,” she said.

Fraher praised the SEC’s leadership under Chair Paul Atkins for rescinding the gag rule and allowing her to speak. “I am glad the right to speak the truth has finally been restored,” she added, and called for attention to the long-term professional and personal toll of enforcement actions.

On the bank’s collapse, Fraher disputed the idea that Silvergate’s wind-down was driven only by a traditional bank run or market fallout from the November 2022 collapse of FTX. She acknowledged a deposit run that removed about 70% of deposits but said the bank had restructured by early 2023 with what she described as appropriate capital levels and a smaller workforce to continue operations safely.

She said the final decision to wind down resulted from wider administrative and regulatory pressure on the digital asset industry that made operating the business untenable.

Observers note that regulatory scrutiny intensified after the FTX collapse and that other banks, including Signature Bank and Silicon Valley Bank, closed in early 2023 after deposit runs and liquidity stress linked to contagion in the crypto sector.

Fraher reiterated that her settlement was a practical decision rather than an admission that the bank’s controls were flawed and urged policymakers and regulators to consider the personal effects enforcement actions can have on industry professionals.