Collapsed cryptocurrency bank Silvergate is working with U.S. regulators to find a way to recover, according to a Bloomberg report. March 7.
Officials Visit Silvergate Headquarters
Bloomberg reported that Federal Deposit Insurance Corporation (FDIC) officials visited Silvergate’s California headquarters last week with permission from the Federal Reserve.
Silvergate has yet to decide how to handle the financial issues that began last week. However, according to the report, crypto-friendly banks may seek investments from elsewhere in the crypto industry to restore liquidity.
Bloomberg also said banks may be able to recover without further engagement with regulators, despite the FDIC’s involvement.
Neither Silvergate nor the FDIC has publicly commented on this issue. Bloomberg instead cited a number of sources familiar with the company.
Why Silvergate Is at Risk of Failure
On March 1, Silvergate filed with the SEC to report its late filing of the 10-K.
The filing also revealed that Silvergate faces investigations from regulatory agencies, including the Department of Justice (DOJ). These inquiries may be related to Silvergate’s role in his FTX and Alameda Research demise last year, as reported in February.
Silvergate said in its filing that it appreciates its ability to “continue as a going concern,” which has raised many concerns about its stability.
The value of Silvergate stock (SI) fell sharply just days after its filing with the SEC. As of March 7, the stock is at $5.21, down more than 61% from its $13.53 price on March 1.
Several cryptocurrency companies have pulled out of Silvergate’s services, while others report minimal exposure to the company. Over the weekend, Silvergate announced that it would be shutting down the Silvergate Exchange Network (SEN) while leaving other services open.
The White House said on March 6 that it was aware of the Silvergate situation. The bank said it was one of many struggling crypto companies, but declined to comment specifically.
