Silvergate Is Seeking FDIC Help To Avoid Company Closures

Key Points:

• FDIC officials have been working with Silvergate management on how to keep the firm afloat.
• One possibility is to seek out crypto sector investors to support its liquidity. The bank has not decided how to deal with its escalating financial problems.
• The FDIC is scrutinizing the company’s books and records.

Silvergate Capital had to rely on the help of US regulators to maintain the bank’s operations amid mounting difficulties.

According to Bloomberg, which cited individuals familiar with the case, Federal Deposit Insurance Corp (FDIC) officials have been working with the management of ailing crypto-focused bank Silvergate Capital to avert closure.

FDIC officials have met with management to explore strategies. According to one of the persons, one conceivable approach is to gather crypto-industry investors to assist Silvergate in shoring up its liquidity. Last week, FDIC investigators visited the firm’s headquarters in La Jolla, California.

The bank hasn’t decided how to cope with its escalating financial problems. According to one of the witnesses, FDIC inspectors were permitted to visit the bank’s offices by the Federal Reserve, which is the lender’s primary government oversight.

The FDIC’s participation is the latest indication of the gravity of Silvergate’s problems. Silvergate indicated last week that it would postpone submitting its annual report due to requests from its independent auditors and accounting firm, as well as outstanding governmental and other inquiries and investigations.

According to the company’s records, Silvergate’s deposits reached $6.3 billion as of December 31. That’s less than half of what it reported at the end of September: $13.2 billion. According to one of the sources, FDIC inspectors are analyzing the firm’s books and records.

The company also cautioned that its ability to remain a going concern for the next year might be jeopardized by its problems.

Key Silvergate partners such as Coinbase, Circle, Paxos, Galaxy, and CBOE have severed their ties with the bank amid fears the crisis will spread.

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Harold

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