Silvergate apparently negotiates with FDIC to prevent shutdown
March 8, 2023 6:41 AM
Last week, officials from the government agency reportedly visited Silvergate's offices to explore ways to save the crypto bank.
Authorities are said to be in urgent talks with Silvergate to find methods to keep the crypto-friendly bank open.
According to Bloomberg on March 7, citing "people familiar with the subject," Federal Deposit Insurance Corporation authorities have been exploring strategies to save the company with management.
According to its website, the FDIC is an independent government organization in the United States entrusted with monitoring financial institutions for safety, soundness, and consumer protection.
According to Bloomberg, FDIC examiners arrived at the firm's headquarters last week and have since been analyzing the firm's books and records.
But, no decision has been taken on how it would deal with its financial difficulties, and FDIC involvement does not imply that a solution cannot be reached without the regulator's intervention, according to another source.
Silvergate shares fell last week when the company announced a delay in the submission of its 10-K report — a document that would provide a complete analysis of the company's business and financial situation.
It stated at the time that it would be "examining the impact" of market volatility and numerous high-profile bankruptcy in 2022 on "its ability to remain as a going concern" over the next 12 months.
Uncertainty about Silvergate's financial status has fueled speculation about a possible bankruptcy filing, which may be costly for the rest of the sector. On March 2, Silvergate stock dropped more than 50% to $5.72 on the New York Stock Exchange, while crypto values fell across the board.
Coinbase, Circle, Bitstamp, Galaxy Digital, and Paxos all declared a reduction in their respective ties with Silvergate within 24 hours of the 10-K delay announcement. MicroStrategy, Binance, and Tether have all denied having any significant exposure to the bank.
According to Google Finance, Silvergate stock was trading at $5.21 at the time of writing, a 70% decrease over the previous month.