Silvergate is asked to submit a liquidation plan within 10 days
Silvergate is asked to submit a liquidation plan within 10 days
One of two crypto -friendly banks that urgently needed liquidity available to the industry - both of which went bankrupt - Silvergate Bank at the beginning of the year, was instructed to present a specific plan for voluntary liquidation within the next ten days.
The liquidation should take place as soon as possible
Silvergate announced for the first time on March 8th, plans for voluntary liquidation. Under the supervision of the financial advisor Centerview partner LLC and the law firm Cravath, Swaine & Moore LLP, the Federal Reserve issued a declaration of consent - an incontestable comparison agreement - to enforce the promised liquidation.
The announcement was made on June 1 by the US Federal Reserve and gives the Silvergate Capital Corporation and its subsidiary Silvergate Bank ten days to present a detailed liquidation plan to the court.
- Federal Reserve (@Fedalreserve) 1. June 2023
Silvergate prioritizes deposit funds
Although Silvergate has promised to "make a full repayment of all deposits" since they announced their liquidation plans, investigations by the US government and its supervisory authorities have uncovered numerous problems with the bank-most of which allegedly worsened after the collapse of FTX. As one of the largest business partners in Silvergate, the sudden collapse of the former crypto empire is said to have led to Silvergate in a liquidity crisis.
In order to prevent abuse of the remaining liquidity, the court has limited the use of funds in order to prevent managers with "golden parachutes" from getting generous severance payments that would enable them to get out of their failure without prejudice
"The order of the Federal Reserve ensures that Silvergate will implement its previously announced plan to handle the bank's business operation in a way that protects the bank and the insured insurance fund.
The arrangement of the Federal Reserve is enforced in cooperation with the Ministry of Finance Protection and Innovation of the State of California (DFPI), the state charter authority and the above -mentioned private supervisory authorities.
Since Silvergate, Signature and Silicon Valley Bank are no longer involved, the crypto industry is looking for alternative banks as a whole that can provide fiat reserves for all operations. Unfortunately, the collapse of FTX and other crypto platforms has clouded the view of the banking industry on cryptocurrencies, an attitude that is still worse by the current, supposedly wild-west-like regulatory enforcement by the Sec and other regulatory authorities.
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