Silvergate Bank, which is known for being crypto-friendly, has been instructed to wind down its operations. The Federal Reserve Board issued a consent order to Silvergate Capital Corporation and Silvergate Bank on June 1, 2022. The company had initially announced voluntary self-liquidation on March 8, 2022.
The order requires Silvergate Bank to submit a shutdown plan to supervising agencies within 10 days of the order. The company is supervised by the Federal Reserve Bank of San Francisco and California’s Department of Financial Protection and Innovation (DFPI). Once the shutdown plan is approved by the supervisors, Silvergate must adopt the plan within 10 days.
As per the order, Silvergate’s shutdown process must protect depositors and the Deposit Insurance Fund. Silvergate must maintain staff, manage financial instruments, and maintain records for the benefit of depositors. The company is prohibited from making certain transactions or expanding its business without regulatory approval. The order specifically disallows “golden parachute” agreements that could excessively compensate new or reassigned executives.
Cooperation with Regulators
The order notes that Silvergate began experiencing a decline in deposits following the collapse of FTX in late 2022. Silvergate is cooperating with regulators by providing documents and evidence related to its relationship with FTX and Alameda. The company will continue to cooperate following its shutdown.
Silvergate Bank has been ordered by the Federal Reserve Board to shut down its operations. The company must submit a shutdown plan to supervising agencies within 10 days of the order and adopt the plan within 10 days of receiving approval from supervisors. The order requires Silvergate to maintain staff, manage financial instruments, and maintain records for the benefit of depositors. The company cannot make certain transactions or expand its business without regulatory approval. Silvergate is cooperating with regulators and will continue to do so following its shutdown.