Silvergate in Talks with FDIC to Prevent Breakdown: Report
- Silvergate met with officials from the Federal Deposit Insurance Corporation (FDIC) to prevent a possible breakdown.
- The officials visited the company’s headquarters last week and dug deep into the records and books of the crypto firm to come up with a possible solution.
- Sources said that a decision has yet to be made by the executives and directors to deal with the company’s financial strife.
- The company last week confirmed that it would close the Silvergate Exchange Network, a digital asset payment platform.
The crypto community is sceptical regarding the operational capabilities of popular crypto bank, Silvergate, whose stock has plummeted more than 50% in the past few weeks after the company announced that it would postpone the filing of its annual 10-K financial report, leading to the industry questioning its financial capabilities. Interestingly, a report claims that the fintech firm is in talks with officials from the Federal Deposit Insurance Corporation (FDIC) to prevent a possible breakdown.
As per a Bloomberg report on March 7, the FDIC, a United States government corporation that is responsible for maintaining the soundness, safety, and consumer protection of companies and banking firms operating in the US. It was created during the Great Depression to re-instill the faith of American consumers in the US banking system.
Bloomberg stated that as per people familiar with the matter, Silvergate is in talks with the FDIC to discuss ways that can be introduced to improve the company’s conditions and prevent a possible collapse.
The report also confirms that several officials arrived at the headquarters of the fintech firm last week to check Silvergate’s records and books and dig deep into the company’s finances. It is crucial to note that the sources told Bloomberg that a decision has yet to be made by the executives and directors to deal with the company’s financial strife.
According to the sources, the involvement of the FDIC in the financial matters of Silvergate does not mean that the company is incapable of fixing its finances on its own. The company lost the confidence of its partners and investors when it stated that it would postpone its 10-K filing, adding that it was evaluating the impact” of market volatility and several high-profile bankruptcies in 2022 on “its ability to continue as a going concern” over the next 12+ months.
The fintech firm added that it needs more time “to allow its independent registered public accounting firm to complete certain audit procedures, including the review of adjustments not yet recorded and the evaluation of the effectiveness of the Company’s internal control over financial reporting.”
On the other hand, big names in the crypto industry like Tether, MicroStrategy, Circle, Bitstamp, Galaxy Digital, Coinbase, and Paxos distanced themselves from Silvergate, while several firms scaled back their partnerships, including Crypto.com, Blockchain.com, Wintermute, GSR, and Cboe Digital.
Furthermore, as reported earlier by Bitnation, veteran short seller Marc Cohodes has predicted that Silvergate will die within a week while sharing pictures of the firm’s deserted office. Cohodes said that “Silvergate is a publicly traded crime scene” and added that the CEO of the company, Alan Lane, belongs in prison.
Last week, the firm announced that it would close its digital assets’ payment network, the Silvergate Exchange Network (SEN), adding that the termination is a “risk-based decision.” The California-based company also confirmed a loss of close to $1 billion in its Q4 2022 report and also laid off employees.