Federal Reserve Board drops enforcement action against Silvergate

Vince Quill6 hours agoFederal Reserve Board drops enforcement action against SilvergateSilvergate Bank, a former crypto-friendly bank, collapsed in March 2023 due to the fallout created by the implosion of the FTX exchange.987 Total views13 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksThe Federal Reserve Board announced it dropped all enforcement action against Silvergate Bank and the Silvergate Capital Corporation on July 26, 2024.

According to the announcement, the board ended its enforcement action due to Silvergate successfully winding down its operations, reimbursing customers and no longer operating as a bank.

The Federal Reserve Board of Governors returned Cointelegraph’s request for more information but declined to comment directly on the situation.The collapse of Silvergate

In March 2023, Silvergate Bank collapsed amid widespread speculation that the financial health of the bank was in dire straits.

One month earlier, in February 2023, Silvergate’s stock was the second-most shorted stock on Wall Street, with 72% of the company’s stock borrowed to open short positions.

Related: SEC files lawsuit against FTX-linked bank, alleging fraud.

To make matters worse for Silvergate, the bank delayed the release of its 10-K form in early March 2023. Form 10-K is an annual filing providing investors with insight into the financial health of a company, which is required by law for all publicly listed companies in the United States. The delayed disclosure caused Silvergate’s stock to fall sharply by 31%.

Shortly after these signs manifested, Silvergate collapsed on March 8, 2023, citing shortfalls caused by the collapse of FTX and major clients pulling their funds from the compromised bank.

As part of the bank’s self-liquidation plan, the Federal Reserve Board of Governors provided oversight to ensure the liquidation plan maximized customer reimbursements.

However, not all injured parties were satisfied with the announced liquidation plan, despite the government oversight, and filed lawsuits againstthe now-defunct bank. Amid the liquidation and growing legal troubles, CEO Alan Lane and other top executives left the company in August 2023.Silvergate not out of the woods just yet

Although the Federal Reserve Board ended its enforcement action against Silvergate, the former bank still has unfinished legal troubles.

In March 2024, federal court Judge Ruth Bermudez Montenegro allowed a class-action lawsuit against Silvergate alleging the bank enabled the FTX fraud to move forward.

More recently, in July 2024, the Securities and Exchange Commission likewise sued the Silvergate Capital Corporation, accusing the entity of complicity with the FTX fraud.

Magazine: Doctor Who materializes in Web3: Tony Pearce’s journey in time and space.# Federal Reserve# Business# FTX# Regulation# SilvergateAdd reaction