The Federal Reserve Board said on June 1 that it issued a consent order to crypto-friendly bank Silvergate, directing it to cease operations.
must protect depositors
Silvergate Capital Corporation and Silvergate Bank must submit shutdown plans to supervisory agencies within ten days of the June 1 order. Silvergate must adopt its plan ten days after receiving approval from the supervisors.
The company is overseen by the Federal Reserve Bank of San Francisco and the California Department of Financial Protection and Innovation (DFPI).
The text of the latest order states that Silvergate’s shutdown process must protect depositors and the Deposit Insurance Fund. This means that the company must retain employees, manage financial instruments and maintain records for the benefit of depositors.
The order states that Silvergate cannot enter into certain transactions or expand its business without regulatory approval. The order specifically disallows “golden parachute” agreements that can excessively compensate new or reassigned officers.
Silvergate initially announced a voluntary self-liquidation on March 8.
The company’s issues began on March 1, when Silvergate filed a late 10-K form saying it was considering its ability to “continue as a going concern”. That news, combined with previous reports of inquiries, led to a bank run.
The order also states that Silvergate deposits began to experience a decline in late 2022 following the collapse of FTX. Silvergate is cooperating with regulators by providing documents and evidence regarding its relationship with FTX and Alameda. The order states that it will continue to cooperate even after the bandh.
While a total shutdown of Silvergate is still pending, one of its core services – the Silvergate Exchange Network (SEN) – was shut down in March.
Posted in: US, Bankruptcy, Featured, Regulation author Mike Dalton Journalist at Crypto Slate
Before transitioning to crypto writing in 2018, Mike studied library and information science. Currently, he resides on the west coast of Canada.
Editor Zaim Shoaib Zuberi Editor at Crypto Slate
Influenced by business, finance, DeFi and crypto editor Zaim holds a degree in business and finance. His 14-year career in financial journalism spans sectors such as banking, finance, insurance and technology.
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