Failing bank Silvergate and FDIC are discussing recovery plans

[Hydrogen]

Silvergate could seek investments from others in the crypto industry.

Failing crypto bank Silvergate is exploring ways to make a recovery with U.S. regulators, according to a report from Bloomberg on March 7.

Officials have visited Silvergate HQ

Bloomberg reported that Federal Deposit Insurance Corp (FDIC) officials visited Silvergate’s California headquarters last week with authorization from the Federal Reserve.

Silvergate has not yet decided how to handle its financial issues, which began last week. However, the crypto-friendly bank could seek investments from elsewhere in the cryptocurrency industry in order to regain liquidity, according to the report.

Bloomberg also said that, in spite of the FDIC’s involvement, the bank may be able to make a recovery without further engagement with regulators.

Neither Silvergate nor the FDIC have publicly commented on the matter. Bloomberg instead cited a number of sources who are familiar with the company.

Why Silvergate is at risk of failure

On March 1, Silvergate submitted a filing to the SEC to report a delayed 10-K filing.

That filing additionally revealed that Silvergate faces inquiries from regulators including the Department of Justice (DOJ). Those inquiries are likely related to Silvergate’s role in the collapse of FTX and Alameda Research last year, as reported in February.

Silvergate also said in its filing that it is evaluating of its capacity to “continue as a going concern,” leading many to become concerned about its stability.

The value of Silvergate shares (SI) rapidly declined in the days following its SEC filing. As of March 7, the stock is worth $5.21, down more than 61% from $13.53 on March 1.

Several crypto companies have withdrawn from Silvergate’s services while others have reported minimal exposure to the firm. On the weekend, Silvergate announced that it would shut down its Silvergate Exchange Network (SEN) while keeping other services open.

The White House said on March 6 that it is aware of Silvergate’s situation. It noted that the bank is one of many struggling crypto firms but declined to make a specific comment.

https://cryptoslate.com/failing-bank-silvergate-and-fdic-are-discussing-recovery-plans/

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"Don't call it a comeback."  (?)

Would be interested to know if there was a prospective road for silvergate quickly rebuilding client trust and positive brand name recognition. Binance appears to have similar issues. Everyone who did major business with FTX appears to be under scrutiny at the moment.

Some say the internet never forgets. How should financial establishments like silverage and binance go about encouraging people to forget their affiliation with FTX? Could they perhaps shift industries and try to do business in other sectors where no one has heard of them?

Guilt by association being what it is. Is it fair to say, past associations with name like Bernie Madoff or Enron in past history, could be compared to a death sentence for those offering financial services? Has the public's attention span and memory shortened over time. To a point, where people won't remember FTX happened within a few short years?

How do people envision an attempt at a silvergate reboot panning out?

[1714799120]

1714799120

[stompix]

The value of Silvergate shares (SI) rapidly declined in the days following its SEC filing. As of March 7, the stock is worth $5.21, down more than 61% from $13.53 on March 1.

Make that 4.91 at closing time and 2.87 !!! after hours.

Also, no, there won't be any recovery plans, this just hit the news a few hours ago:
https://ir.silvergate.com/news/news-details/2023/Silvergate-Capital-Corporation-Announces-Intent-to-Wind-Down-Operations-and-Voluntarily-Liquidate-Silvergate-Bank/default.aspx

In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward. The Bank’s wind down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.

[EarnOnVictor]

Silvergate is facing its own challenges and I'm not surprised that FDIC officials are visiting. They need to ascertain some facts of insolvency so that the bank will not be playing smart, which is normal. They could also help where possible and the bank is triable and penalizable if found wanting against the law.

Personally, I believe they need a bailout to achieve their recovery plan, and indeed, they can recover. But this case is nothing compared to Binance as you claimed, Binance is stable despite having dealt with FTX as their deals with the exchange were minimal.

[harapan]

Some say the internet never forgets. How should financial establishments like silverage and binance go about encouraging people to forget their affiliation with FTX? Could they perhaps shift industries and try to do business in other sectors where no one has heard of them?

It's not going to be an easy task and if not handled properly could lead to more losses. There's no way they can avoid this phase. Even if they start doing business with other sector (which is just a theory), there's no escaping this scrutiny. They just have continue being transparent and consistent when dealing with customers. The scrutiny is not only on Silvergate and Binance alone but a lot of centralized institutions, Its just going to be much worst on the likes of Binance. A lot of people are skeptical and do not trust these institutions anymore. The only way they can win the trust back is to just keep on being transparent.

[adaseb]

I got confused but then realized this was posted on March 8th basically days before all this bank mess.

The stock is still listed and trades at $2, so most likely they got some assets which will get sold and shareholders will get something back.
Maybe the SigNet (or whatever it was called) will get bought out by another regional bank who will do crypto transfers from now on. So far too early to tell.