Failing bank Silvergate and FDIC are discussing recovery plans
Silvergate could seek investments from others in the crypto industry.
Failing crypto bank Silvergate is exploring ways to make a recovery with U.S. regulators, according to a report from Bloomberg on March 7.
Officials have visited Silvergate HQ
Bloomberg reported that Federal Deposit Insurance Corp (FDIC) officials visited Silvergate’s California headquarters last week with authorization from the Federal Reserve.
Silvergate has not yet decided how to handle its financial issues, which began last week. However, the crypto-friendly bank could seek investments from elsewhere in the cryptocurrency industry in order to regain liquidity, according to the report.
Bloomberg also said that, in spite of the FDIC’s involvement, the bank may be able to make a recovery without further engagement with regulators.
Neither Silvergate nor the FDIC have publicly commented on the matter. Bloomberg instead cited a number of sources who are familiar with the company.
Why Silvergate is at risk of failure
On March 1, Silvergate submitted a filing to the SEC to report a delayed 10-K filing.
That filing additionally revealed that Silvergate faces inquiries from regulators including the Department of Justice (DOJ). Those inquiries are likely related to Silvergate’s role in the collapse of FTX and Alameda Research last year, as reported in February.
Silvergate also said in its filing that it is evaluating of its capacity to “continue as a going concern,” leading many to become concerned about its stability.
The value of Silvergate shares (SI) rapidly declined in the days following its SEC filing. As of March 7, the stock is worth $5.21, down more than 61% from $13.53 on March 1.
Several crypto companies have withdrawn from Silvergate’s services while others have reported minimal exposure to the firm. On the weekend, Silvergate announced that it would shut down its Silvergate Exchange Network (SEN) while keeping other services open.
The White House said on March 6 that it is aware of Silvergate’s situation. It noted that the bank is one of many struggling crypto firms but declined to make a specific comment.