The Federal Reserve Board said on June 1 that it had issued a clearance order to crypto-friendly bank Silvergate, directing it to wind down operations.
Should protect savers
Silvergate Capital Corporation and Silvergate Bank must file a shutdown plan with regulatory authorities within 10 days of the June 1 order. Silvergate must then approve its plan ten days after receiving regulatory approval.
The company is regulated by the Federal Reserve Bank of San Francisco and the California Department of Financial Protection and Innovation (DFPI).
The text of the latest order said that Silvergate’s closing process should protect depositors and the Deposit Insurance Fund. This means that the company must maintain staff, manage financial instruments and keep records for the benefit of depositors.
The order stated that Silvergate could not make certain transactions or expand its business without regulatory approval. The order specifically prohibits “golden parachute” agreements that could excessively compensate new or transferred executives.
Time is up
Silvergate initially announced voluntary self-liquidation on March 8.
The company’s troubles began days earlier, on March 1, when Silvergate filed a late 10-K form and said it was considering “continuing as a going concern.” That news, combined with previous reports of investigations, led to a bank run.
The order also notes that Silvergate began experiencing a decline in deposits 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. It will continue to work together after the shutdown, the order says.
While Silvergate’s full shutdown is still underway, one of its most important services – the Silvergate Exchange Network (SEN) – was shut down in March.
Silvergate’s post to file shutdown plan in coming days following Federal Reserve order appeared first on CryptoSlate.