Silvergate Capital Organization and its crypto-accommodating bank will have 10 days to present a self-liquidation plan in compliance with California and government prerequisites.
As part of its plans to "wind down operations" and liquidate, Silvergate Bank and its parent company have received a consent order from the Federal Reserve Board of the United States.
In a June 1 notification, the Fed said Silvergate Capital Partnership and the bank will have 10 days to present a self-liquidation plan in compliance with California and government necessities that will unwind their tasks. One of three major crypto-friendly banks to close, the company announced in March that it would cease operations "in light of recent industry and regulatory developments."
Even though Silvergate voluntarily announced its liquidation with plans for a "full repayment of all deposits," the Fed notice stated that examinations "identified numerous deficiencies" at the bank after one crypto exchange collapsed in November 2022. In the fourth quarter of 2022, Silvergate "experienced significant declines in deposits by its crypto-asset-related customers," resulting in "funding and liquidity stress," as stated by the Fed.
The protection of depositor funds will be a top priority in any Silvergate self-liquidation strategy. Any plan that Silvergate proposes will be looked over and approved by Fed officials and the Department of Financial Protection and Innovation in California. Silvergate's leadership's ability to receive "golden parachute payments" and shift responsibilities during the winding-down process has also been restricted by regulators.
Related: The liquidation of Silvergate may not have a lasting impact on the cryptocurrency industry.
Silvergate was the first major crypto-friendly bank to close its doors, followed by Signature Bank and Silicon Valley Bank. numerous businesses that deal in digital assets.
(TURNER WRIGHT, Cointelegraph, 2023)