Silvergate Bank saga continues as its stock price drops by another 3.7%.
Silvergate Bank, a Californian bank that specializes in providing financial infrastructure to the cryptocurrency trading industry, and Federal Deposit Insurance Corporation (FDIC) are reportedly searching for ways to save the crypto bank from collapse.
The Federal Deposit Insurance Corporation (FDIC) is an independent United States agency created by Congress to “maintain stability and public confidence in the nation’s financial system.” The agency is working on ensuring safety and consumer protection in financial institutions.
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According to the Bloomberg report shared on March 7th, the news was revealed by a person familiar with the matter.
The individual who wanted to remain anonymous highlighted that FDIC and Silvergate Bank management are discussing any possibilities that would allow Silvergate to avoid “shutdown.”
FDIC is offering Silvergate to allow “crypto-industry investors to help Silvergate shore up its liquidity.” However, the person familiar with the matter noted that Silvergate “hasn’t made a decision on how to deal” with its financial troubles.
The report also noted that a group of FDIC examiners first visited Silvergate’s offices in California last week. According to the insiders, currently, FDIC is looking into crypto bank's books and records.
It is worth noting that neither Silvergate nor FDIC commented on the matter. The Federal Deposit Insurance Corporation highlighted that it doesn’t comment on “open and operating institutions.”
The news about possible troubles of Silvergate Bank started spreading in January when the firm revealed it had recorded a $1 billion net loss in the fourth quarter of 2022. However, that was only the tip of the iceberg.
In February, the United States Department of Justice began investigating Silvergate's connections with bankrupt crypto exchange FTX and Alameda Research. The downfall of Silvergate started in March when the company revealed that it had to delay Form 10-K submission by two weeks.
Afterward, major crypto firms like Coinbase, Paxos, and Circle terminated their partnerships with Silvergate. On March 3rd, Silvergate ceased its crypto payment network claiming it was a “risk-based decision.” As a result, Silvergate’s stock price fell by more than 60% compared to its price before the firm revealed the delay in the 10-K form submission.
White House said it was “aware of the situation” at Silvergate. On March 7th, the trade for Silvergate stock closed at $5.21, which is almost 62% lower than its price on March 1st.
