Crypto bank Silvergate is gambling its survival: the last chance talks

Silvergate on the brink – Following the disaster FTXthere Silvergate Bank found herself in a situation more than precarious. To the point that its parent company, the Silvergate Capital Corporation, is itself threatened. Many crypto players, like Coinbase and Circle, or even MicroStrategyhave already started take their distance vis-à-vis this new pestiferous potential. Silvergate therefore tries everything for everything, and negotiate his survival with regulators FDIC.


The FDIC at the bedside of the crypto-bank Silvergate

Didn’t the dramatic bankruptcies and failures end with 2022 in the cryptosphere? When we see the state of the Silvergate Bankwe can indeed still fear a last noisy fall.

Since last week, regulators of the Federal Deposit Insurance Corporation (FDIC) would be present in the offices of the Californian headquarters of Silvergate Capital Corporation, the parent company of the crypto-bank.

According to people close to the file » quoted by Bloomberg on March 7, 2023, FDIC examiners are reportedly investigating the possibility of save the Silvergate group in “bringing together investors from the cryptocurrency sector”. Or at least, to avoid its premature closure, via a bankruptcy.

Silvergate announces $1 billion loss in Q4
Silvergate on the brink

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Deposits in free fall: -52% in the last quarter of 2022

The FDIC is a independent government agency the United States. It is responsible for supervising financial institutions to ensure their safety and soundness, as well as consumer protection. She is the one who guarantees bank deposits in the USA, up to $250,000.

His intervention with the crypto-bank is a new “emergency sign” on her situation. Because in this case, the FDIC is certainly trying to protect customer interests of the Silvergate Bank, but she would also like to protect the funds of the State. Indeed, as this is a regulated bankSilvergate customer deposits are insured by the state.

And these deposits are still important, even if they were divided by more than 2 in the last quarter of 2022. They would have gone from 13.2 billion dollars at the end of September, at only 6.3 billion dollars as of December 31. A sacred capital flight (about -52.3%).

FDIC examiners would therefore be in the process of comb through registers and account books of Silvergate. In order to find out if the crypto-bank can still escape the worst. For the moment, “no decision” definitive would not have been taken. In any case, Silvergate Bank remains caught in FTX legal turmoil.

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