A new report has come up for Silvergate, which has recently emerged that it could not recover after the FTX collapse. Failed crypto bank Silvergate is exploring ways to recover with US regulators, according to a report by Bloomberg on March 7. Bloomberg reported on March 7 that officials from the US federal insurance agency, the Federal Deposit Insurance Corporation (FDIC), discussed with management ways to save the company. Here are the details…
Officials visit crypto-friendly company Silvergate
Bloomberg reports that Federal Deposit Insurance Corp (FDIC) officials visited Silvergate’s headquarters in California last week, with authorization from the Federal Reserve. Silvergate has yet to decide how it will handle its financial issues that began last week. However, according to the report, the crypto-friendly bank may seek investment from elsewhere in the cryptocurrency industry to regain liquidity. Bloomberg also said that despite the involvement of the FDIC, the bank could achieve a rebound without further interaction with regulators. Neither Silvergate nor the FDIC have made a public statement on the matter.
Bloomberg instead cited a number of sources familiar with the company. One of Bloomberg’s sources said FDIC investigators have been examining the firm’s books and records since last week. However, another source said that a decision has yet to be made on how to deal with the financial strife, and the involvement of the FDIC suggests that a resolution cannot be reached without the input of the regulator.
What had happened?
On March 1st, Silvergate filed a filing with the SEC to announce that it will delay the 10-K certification, as we reported on Kriptokoin.com. This filing also revealed that Silvergate is facing investigations from regulators, including the Department of Justice (DOJ). These investigations are thought to likely relate to Silvergate’s role in last year’s collapse of FTX and Alameda Research, as reported in February.
Silvergate also said in its filing that it is assessing its capacity to “continue as a continuing business.” This has caused many to worry about its stability. The value of Silvergate shares (SI) fell sharply in the days following the SEC filing. Currently, the stock is valued at $5.21, down more than 61 percent from $13.53 on March 1. A few crypto companies have withdrawn from Silvergate’s services, while others have reported minimal exposure to the firm. Over the weekend, Silvergate announced that it will shut down the Silvergate Exchange Network (SEN) while keeping other services open.
The White House said it was aware of Silvergate’s situation on March 6. He noted that the bank is one of many struggling crypto companies, but declined to make any specific comments. Within 24 hours of the delay announcement, Coinbase, Circle, Bitstamp, Galaxy Digital, and Paxos; announced that they are downscaling their individual partnerships with Silvergate. MicroStrategy, Binance and Tether emphasized that they do not have any exposure to the bank.
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