Crypto Bank Silvergate to Shut Down and Liquidate, after FDIC Examiners Show up. Shares Collapse Entirely

US stocks silvergate 2023 03 08

by Wolf Richter at

In 16 months from $239 at peak crypto consensual hallucination to $2.76, including the 44% plunge afterhours.

In a tersely worded press release this afternoon, Silvergate Capital, the holding company of crypto bank Silvergate Bank, announced that it would “wind down operations and voluntarily liquidate” Silvergate Bank “in an orderly manner and in accordance with applicable regulatory processes.”

This comes a day after Bloomberg News reported, based on its sources, that FDIC examiners were rummaging through the banks books and records at Silvergate Bank, and that FDIC officials have been in discussions with Silvergate management to figure out how to move forward.

So it seems, management has arrived at a decision on how to move forward.

On January 5, I’d said in a headline about Silvergate’s shocking filing that day, that “I’m waiting for the FDIC to show up.” I had to wait about two months.

In the announcement today, Silvergate said:

“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.”

The announcement of the final act for the bank comes just days after Silvergate Capital issued a “going concern” warning, on March 1, along with a slew of other bone-chilling items – bone-chilling for Silvergate’s investors and any remaining depositors with balances above FDIC deposit-insurance limits. It said:

It would be restating its financial statements and would show an even bigger loss than the $1 billion loss it booked for Q4; it would not be able to file its annual report by the deadline due to “management’s evaluation of internal controls over financial reporting”; these losses would “negatively impact the regulatory capital ratios” and “could result in the Company and the Bank being less than well-capitalized”; and it was “reevaluating its businesses and strategies in light of the business and regulatory challenges it currently faces.”

“Oh dude,” I moaned after I put that list together on March 1.

And so it seems, management completed the reevaluation of its businesses and decided to shut down and liquidate the bank.

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