In a significant development for the crypto industry, Silvergate Bank, known for its crypto-friendly approach, has agreed to file a self-liquidation plan with California financial regulators within 10 days. This decision comes in response to a consent order issued by the Federal Reserve Board against Silvergate Capital Corporation and Silvergate Bank, indicating the bank’s intention to voluntarily liquidate its assets, which was initially announced on March 8, 2023.
Silvergate To Self-liquidate Within 10 Days
The self-liquidation plan submitted by Silvergate Bank must gain approval from the California Department of Financial Protection and Innovation, although an extension to the deadline is a possibility. The bank had previously announced its decision to cease operations after facing a business failure.
Read More: Elon Musk Faces Lawsuit Over Dogecoin Price Manipulation
The consent order issued by the Federal Reserve highlights various deficiencies identified during the recent examination of Silvergate Bank by state regulators and officials from the Federal Reserve Bank of San Francisco. These deficiencies encompass both safety and soundness concerns as well as non-compliance with banking laws and regulations. Notably, the order links the bank’s failure to its involvement with the now defunct crypto exchange, FTX.
Silvergate’s Ties With Defunct FTX
Silvergate Bank managed to weather the storm caused by FTX’s collapse and absorb losses from the write down on Diem, a Facebook-linked digital asset. The bank achieved this by securing an unprecedented and controversial emergency loan worth billions of dollars from the Federal Home Loan Bank of San Francisco. This institution, created by the government to support mortgage borrowing in the United States, provided temporary relief to Silvergate Bank.
According to the Federal Reserve’s announcement, the leadership of Silvergate Bank has voluntarily accepted all aspects of the enforcement action. As part of the consent order, any bonuses, promotions, or severance payments for senior executives must receive regulatory approval. As regulators continue to scrutinize crypto-related activities, financial institutions are currently straying away from crypto companies to maintain compliance with existing banking laws and regulations.
Also Read: Circle Announces Native USDC Launch On Arbitrum Network
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
