Silvergate is currently in discussions with FDIC officials about ways to save the bank
Silvergate headquarters in La Jolla, CaliforniaAriana Drehsler/Photographer: Ariana Drehsler/Bl (Bloomberg) –US regulators have been sent to the headquarters of Silvergate Capital Corp., as the troubled crypto-friendly bank looks for a way to stay in business.Federal Deposit Insurance Corp. officials have been discussing with management ways to avoid a shutdown, according to people familiar with the matter. One person said that one option is to line up crypto-industry investment funds to help Silvergate improve its liquidity. FDIC examiners arrived at Silvergate’s La Jolla offices in California last week, according to people. One person said that FDIC examiners were allowed to visit the bank’s offices by Federal Reserve, the main federal overseer of the lender. Silvergate representatives did not respond to telephone and e-mail messages seeking comment. The FDIC stated that it does not comment on “open and operational institutions.” The Fed declined to comment. Silvergate’s woes are now more urgent than ever thanks to the involvement of the FDIC. The firm stated last week that mounting losses could force it to evaluate its viability. The regulator could play a significant role in any solution because deposits from the lender’s clients have been insured by the government. Another person stated that the involvement of the Fed or FDIC does not mean that the bank will not be able to solve its problems without regulators. According to filings from the firm, Silvergate’s deposits were $6.3 billion as of Dec. 31. According to filings by the firm, Silvergate’s deposits totaled $6.3 billion as of Dec. 31. Last week, the bank announced that it would discontinue its flagship crypto payments network. This was after clients began to distance themselves from the bank amid growing uncertainty. The US Justice Department’s fraud unit has been investigating Silvergate’s dealings in FTX and with trading firm Alameda Research. The bank has not been accused of any wrongdoing and the investigation could be closed without any charges being filed. However, regulators have the option to place a bank in receivership if it is on the financial brink. The FDIC can then step in to help. The FDIC can then intervene to help. In this scenario, the agency would prefer to merge the troubled institution with a healthy lender. However, in the absence of a buyer the agency could choose to pay depositors, who are covered for up to $250,000 per depositor per insured bank for each account ownership category. Jerome Powell, Fed Chairman, was asked Tuesday about the efforts of watchdogs to monitor crypto. He didn’t mention Silvergate or any particular firm in his response. “Like everyone else we’re watching the crypto space and what’s happening, and what we see are quite a few turmoil,” he said to the Senate Banking Committee. “What we have been doing is making sure that the regulated banks that we supervise and regulate are careful and are taking great care in how they interact with the crypto space. We also require them to give us prior notice. With the assistance of Sally Bakewell.