Silvergate Fined $63 Million by Fed, State Regulator

Silvergate Bank, the California lender done in by the collapse of crypto exchange FTX, has been fined $63 million by two regulators for allegedly failing to monitor transactions.

The Federal Reserve on Monday announced the penalties against the bank, owned by Silvergate Capital Corp. The Fed portion of the fine is $43 million, and the California Department of Financial Protection and Innovation makes up the remainder.

Silvergate didn’t admit to or deny claims made by the Fed as part of the settlement.

Separately, the US Securities and Exchange Commission is suing Silvergate Capital Corp., a California lender that was done in by the collapse of crypto exchange FTX.

The SEC sued the bank in federal court in Manhattan, according to a docket entry on Monday, which cited “securities fraud” as the cause. Multiple former Silvergate executives were also listed as defendants on the entry, which didn’t provide details of the case.

A representative for the company declined to comment.

As one of the few traditional banks to embrace doing business with the then-nascent digital-asset industry, Silvergate became embroiled in the crypto industry’s meltdown in late 2022 and 2023. The lender had made a name for itself by operating one of the few payments systems that allowed investors and digital asset companies to convert US dollar deposits into digital assets.

Top photo: The Silvergate Bank headquarters in La Jolla, California, US, on Thursday, March 9, 2023. Silvergate Capital Corp. plans to wind down operations and liquidate its bank after the crypto industrys meltdown sapped the company’s financial strength, sending shares plunging. Photographer: Ariana Drehsler/Bloomberg.