|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cryptocurrency News Articles
Silvergate Capital Files for Bankruptcy, Blames Regulators for Its Downfall
Sep 25, 2024 at 05:00 pm
Silvergate Capital Corp., the parent company of digital asset-friendly lender Silvergate Bank, has filed for Chapter 11 bankruptcy protection at a U.S. court.
Silvergate Capital Corp. (NYSE:SI), the parent company of digital asset-friendly lender Silvergate Bank, has filed for Chapter 11 bankruptcy protection at a U.S. court.
The bank entered liquidation in March 2023, announcing that it would wind down operations and repay all deposits in the aftermath of the FTX contagion.
In its filing at the United States Bankruptcy Court for the District of Delaware, Silvergate Capital revealed that it has no remaining lines of business and pledged to repay creditors using the remaining cash.
After repaying the depositors, the company will have $163 million in cash. It will use $18 million from this stash to repay bondholders and divide the rest among the stakeholders. However, it doesn’t intend to repay common stockholders.
Silvergate was one of the American banks that capitalized on the rise of digital currency, growing its deposits from less than $2 billion in 2019 to $14 billion two years later. It became the bank of choice for companies like Circle, which held $3.3 billion in USDC reserves at the bank.
By 2021, digital asset deposits at Silvergate Bank accounted for a staggering 98% of the bank’s overall deposits. Then came the FTX collapse in November 2022, which impacted the direct deposits by the exchange and sparked a bank run that saw clients withdraw over $8 billion in weeks.
Silvergate exec: Regulators pushed us out of business
While its tie-up with digital currency has been cited as its downfall, one Silvergate executive has blamed the bank’s collapse on federal regulators.
In an accompanying filing, Chief Administrative Officer Elaine Hetrick narrowed the company’s woes to a push by regulators in early 2023 to tighten their regulatory grip on ‘crypto’ banks.
In February, the U.S. Fed, the OCC, and the FDIC released a joint statement claiming that banks with digital asset exposure may face heightened liquidity risk.
“The increased supervisory pressure on Silvergate Bank and other banks focused on servicing crypto-asset businesses forced Silvergate Bank to a point where it would have needed to remake its business model away from its focus on crypto-asset businesses, seek to sell itself as a going concern in the shadow of the regulatory overhang or begin winding down its affairs with the goal of preserving as much value as possible for stakeholders,” Hetrick wrote in the filing.
Hetrick insists that, before this statement, Silvergate had been able to absorb the shock of the FTX collapse, including by cutting 40% of its staff and suspending capital-intensive services. However, the statement affected investors’ confidence, and the ensuing bank run dealt a massive blow to the bank, she said.
Hetrick added that Silvergate’s closure indicates the U.S. federal regulators’ anti-digital asset stance. She quoted Barney Frank, a former congressman and director of Signature Bank—yet another defunct crypto-friendly bank—who claimed that “regulators wanted to send a very strong anti-crypto message.”
A year after its collapse, federal regulators filed charges against Silvergate, accusing it of lax KYC and AML structures, which allowed over $1 trillion to be transferred through its 24/7 Silvergate Exchange Network (SEN) without monitoring for suspicious transactions.
The top brass also faced charges for misleading investors about the bank’s compliance with the Bank Secrecy Act and its losses from FTX-related debt securities sales. The SEC proved that the management was aware of the deficiencies, with Kathleen Fraher, the chief risk officer, allegedly infamously stating, “We have known of this issue and either we have established other controls to account for it or we haven’t, and we have to take our lumps.”
To settle the charges with the SEC, Silvergate forked out $50 million in penalties. It also paid $43 million to settle similar charges filed by the Fed and $20 million to the California Department of Financial Protection and Innovation.
Watch: Teranode & the Web3 world with edge-to-edge electronic value system
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
-
- Solana-Based Meme Coin POPCAT Hits $1B Market Cap, Cat-Themed Tokens Rally
- Sep 25, 2024 at 08:25 pm
- Solana-based memecoin POPCAT hit an all-time high on Sep. 25 as its market cap shot past the $1 billion mark. At press time, Popcat (POPCAT) was still up 10% over the past day
-
- Unpacking Solana (SOL)’s 633% Surge: A Technical Analysis
- Sep 25, 2024 at 08:25 pm
- Meanwhile, JetBolt (JBOLT), a new entrant in the crypto space, is rapidly capturing attention with its cutting-edge features and zero gas technology. This article will explore the recent performances of Solana, Ripple, and JetBolt, analyzing their market dynamics and implications for the crypto landscape.
-
- Will the CELO Token Reach $1 Following Its Bullish Breakout From a Falling Channel and a Surge Above the 200-Day Exponential Moving Average (EMA)?
- Sep 25, 2024 at 08:25 pm
- As the Web3 and layer-2 network space experiences significant growth, CELO is witnessing an increase in daily active addresses.
-
- Joe Manganiello Delves Deep into Crocodile's Psyche as He Joins the 'One Piece' Live-Action Series
- Sep 25, 2024 at 08:25 pm
- One of the biggest announcements related to the One Piece live-action series has been the addition of Joe Manganiello in the second season as Crocodile.
-
- PEPE Coin (PEPE) and Raboo ($RABT) Are Now the New Investment Options for PEPE Investors in the Meme Coin Market
- Sep 25, 2024 at 08:25 pm
- In the ever-volatile world of meme coins, PEPE investors are now exploring new opportunities with Binance Coin (BNB) and Raboo ($RABT), an ERC20 token that has captured attention with its massive growth potential.
-
- EXMO Cryptocurrency Staking: How to Generate Passive Income From Crypto
- Sep 25, 2024 at 08:25 pm
- Cryptocurrency staking is a process in which owners of digital assets temporarily blockchain their coins to support a blockchain based on the Proof
-
- Donald Trump and His Family Announce the Launch of Their New Cryptocurrency Venture, World Liberty Financial
- Sep 25, 2024 at 08:25 pm
- Former US President, Donald Trump and his family announced the launch of their new cryptocurrency venture World Liberty Financial in an X live stream on Tuesday.
-
- Space ID (SPID) Price Prediction 2024-2030: Will SPID Price Hit $1 Mark?
- Sep 25, 2024 at 08:25 pm
- SPACE ID is a universal name service network with a single-stop identity platform. With Space ID, users can discover, register, trade, and manage web3 domains.
-
- DTX Exchange Leads The Billion-Dollar Trading Industry
- Sep 25, 2024 at 08:25 pm
- Big investors from Ethereum (ETH) and Dogecoin are betting heavily on the DTX Exchange (DTX) because of its ability to lead in the exchange space.