Silvergate in Talks With FDIC Officials to Avoid Shutting Down: Report

US federal officials have been discussing with Silvergate Capital’s management to avoid a shutdown, Bloomberg News reported on Tuesday, citing people familiar with the matter. Shares of the cryptocurrency-focused bank rose about 5 percent in after-market trading.

Last week, the bank warned it was delaying its annual report and said it was evaluating its ability to operate as a going concern.

The company late on Friday said that effective immediately it made a “risk-based decision” to discontinue the Silvergate Exchange Network, which enabled round-the-clock transfers between investors and crypto exchanges, unlike traditional bank wires, which can often take days to settle.

US regulators have been sent to the headquarters of Silvergate as the company looks for a way to stay in business, the report said.

One possible option involves lining up crypto-industry investors to help Silvergate shore up its liquidity, the report said.

Federal Deposit Insurance (FDIC) examiners were authorised to go to Silvergate’s offices by the Federal Reserve, which is its main federal overseer and the examiners are reviewing the company’s books and records, Bloomberg News added.

FDIC examiners arrived at the company’s La Jolla, California offices last week, the people told Bloomberg News, and added the company has not made a decision on how to deal with its deepening financial turmoil.

FDIC and Silvergate were not immediately available for comments.

Silvergate had been trying to ease investor concerns over its future as it reported a $1 billion (roughly Rs. 12,300 crore) loss for the fourth quarter after the collapse of Sam Bankman-Fried’s crypto exchange FTX in November drove investors to pull out $8 billion (roughly Rs. 65,700 crore) in deposits from the bank in the last three months of the year.

© Thomson Reuters 2023