{{Short description|American bank}} {{Use American English|date=May 2026}} {{Use mdy dates|date=November 2022}} {{Infobox company | name = Silvergate Bank | logo = File:Silvergate Bank (logo).svg | type = [[Public company|Public]] | traded_as = {{OTC Expert|SICPQ}} | hq_location = | hq_location_city = [[La Jolla]], [[San Diego, California]] | hq_location_country = U.S. | founded = {{ubl|{{start date and age|1988}}|{{start date and age|1996}} (as a bank)}} | founders = Dennis Frank and Derek J. Eisle (1996 re-capitalization) | defunct = 2023 (announced winding down) | fate = Voluntary [[liquidation]] in [[Chapter 11, Title 11, United States Code|Chapter 11 bankruptcy]] | area_served = Worldwide | key_people = {{ubl|Alan Lane ([[Chief executive officer|CEO]])|Ben Reynolds ([[President (corporate title)|president]])}} | industry = {{ubl|[[Financial services]]|[[Cryptocurrency]]}} | products = {{hlist|[[Banking]]}} | website = {{URL|https://silvergate.com}} |image = San Diego 4250 Executive Square c.jpg |image_caption = Silvergate's San Diego office in 2019 }} {{2023 banking crisis sidebar}} '''Silvergate Bank''' was a [[California]] bank founded in 1988. The company began providing services for [[cryptocurrency]] users in 2016, and conducted an [[initial public offering|IPO]] in 2019.
In 2021, Silvergate initiated efforts to launch its own U.S. dollar-backed [[stablecoin]],<ref name="motley-fool-stablecoin">{{Cite web |last=Berkowitz |first=Bram |date=21 October 2022 |title=After Another Delay, Is Silvergate Capital's Planned Stablecoin Now Dead in the Water? |url=https://www.fool.com/investing/2022/10/21/after-another-delay-is-silvergate-capitals-planned/ |access-date=20 November 2022 |website=The Motley Fool |language=en}}</ref> acquiring [[Meta Platforms|Meta]]'s [[Diem (digital currency)|Diem]] technology in January, 2022 for around $200 [[million]] to assist with this (Silvergate had previously intended to serve as a key issuer of the Diem currency for Meta).<ref name="wsj-diem">{{Cite news |last=Hoffman |first=Peter Rudegeair and Liz |title=WSJ News Exclusive {{!}} Facebook's Cryptocurrency Venture to Wind Down, Sell Assets |url=https://www.wsj.com/articles/facebooks-cryptocurrency-venture-to-wind-down-sell-assets-11643248799 |access-date=20 November 2022 |newspaper=Wall Street Journal|date=January 27, 2022 }}</ref><ref name="bloomberg-diem">{{Cite news |last1=Baker |first1=Liana |last2=Hamilton |first2=Jesse |last3=Kharif |first3=Olga |date=January 25, 2022 |title=Mark Zuckerberg's Stablecoin Ambitions Unravel With Diem Sale Talks |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2022-01-25/zuckerberg-s-stablecoin-ambitions-unravel-with-diem-sale-talks |access-date=20 November 2022}}</ref><ref name="motley-fool-stablecoin" />
In November 2022, concerns were raised about Silvergate's health, after a fall in cryptocurrency prices and the [[bankruptcy of FTX]].<ref name="wsj-contagion" /><ref name="motley-fool-bank-run" /><ref name="bloomberg-ftx" /><ref name="concerns-yahoo" /> In March 2023, the bank announced plans to wind down and [[liquidate]].<ref name="liquidation">{{cite web |last1=Church |first1=Steven |title=Silvergate Slides on Plan to Wind Down Bank Operations and Liquidate |url=https://www.bloomberg.com/news/articles/2023-03-08/silvergate-plans-to-wind-down-bank-operations-and-liquidate |website=[[Bloomberg News]] |access-date=8 March 2023 |language=en |date=8 March 2023}}</ref> Its failure was one of the first in the [[2023 United States banking crisis]].
==History== ===Foundation and growth=== Silvergate Bank was founded as a [[savings and loan association]].<ref name="history1">{{Cite web |last=Rooney |first=Kate |last2=Cheng |first2=Evelyn |date=May 31, 2018 |title=Meet the small community lender that's become the go-to banker of the cryptocurrency world |url=https://www.cnbc.com/2018/05/31/meet-silvergates-alan-lane-whos-bankrolling-cryptocurrency-exchanges.html |access-date=20 November 2022 |website=CNBC |language=en}}</ref><ref name="FDIC Silvergate">{{Cite web |title=Silvergate Bank |url=https://banks.data.fdic.gov/bankfind-suite/bankfind/details/27330 |access-date=20 November 2022 |website=banks.data.fdic.gov}}</ref> Silvergate became a California-chartered bank in 1988.<ref name=dfpi/> In 1996, it was re-capitalized and reorganized into a bank by Dennis Frank and Derek J. Eisele, but it initially remained a three-branch [[community bank]] in the [[San Diego metropolitan area|San Diego region]].<ref name="history1" /><ref name="san-diego-edu">{{Cite web |title=Biography - Derek Eisele - School of Business - University of San Diego |url=https://www.sandiego.edu/business/centers-and-institutes/burnham-moores-real-estate/leadership/policy-advisory-board/biography.php?profile_id=7880 |access-date=20 November 2022 |website=www.sandiego.edu}}</ref>
In 2013, CEO Alan Lane personally invested in [[Bitcoin]]; the company launched an initiative to start serving [[cryptocurrency]] clients in 2016.<ref name="history1" /><ref name="cnn-history">{{Cite web |last=Monica |first=Paul R. La |date=22 February 2021 |title=This bitcoin bank's stock has jumped nearly 1,300% in just over a year |url=https://edition.cnn.com/2021/02/22/investing/silvergate-bitcoin-banking/index.html |access-date=20 November 2022 |website=CNN |language=en}}</ref> After this, the bank grew rapidly, reaching $1.9 billion in assets and 250 clients by 2017.<ref name="history1" /> The company conducted an [[initial public offering|IPO]] in November 2019 at a share price of $13, and by November 2021 the price had risen by 1,580% to $219 due to the [[Cryptocurrency bubble#2020–2022 cryptocurrency bubble|cryptocurrency bubble]] at the time.<ref name="share-price-yahoo">{{Cite web |title=Silvergate Capital Corporation (SI) Stock Price, News, Quote & History - Yahoo Finance |url=https://finance.yahoo.com/quote/SI |access-date=20 November 2022 |website=finance.yahoo.com}}</ref><ref name="cnn-history" />
===Silvergate Exchange Network <span class="anchor" id="Silvergate Exchange Network"></span>=== The bank operated a real-time payments system called the "Silvergate Exchange Network" (SEN), which enabled [[cryptocurrency exchanges]], institutions, and customers to exchange [[fiat currencies]] such as [[US dollar]]s and [[euro]]s.<ref name="motley-fool-bank-run">{{Cite web |last=Berkowitz |first=Bram |date=17 November 2022 |title=Is Silvergate Capital Facing a Bank Run? |url=https://www.fool.com/investing/2022/11/17/is-silvergate-capital-facing-a-bank-run/ |access-date=20 November 2022 |website=The Motley Fool |language=en}}</ref><ref name="motley-fool-defies-odds">{{Cite web |last=Rossolillo |first=Nicholas |date=20 October 2022 |title=Silvergate Capital Defies the Odds and Increases Its Crypto Client Base in Q3 2022 |url=https://www.fool.com/investing/2022/10/20/silvergate-capital-defies-the-odds-and-grows-its-c/ |access-date=20 November 2022 |website=The Motley Fool |language=en}}</ref> Silvergate was probably the first regulated bank to develop this sort of payment system.<ref name="motley-fool-bank-run" /> By the third quarter of 2022 it had $12 billion in deposits from 1,677 "Silvergate Exchange Network" (SEN) customers including all major cryptocurrency exchanges and over 1,000 [[institutional investor]]s.<ref name="motley-fool-bank-run" />
===Stablecoin involvement and Diem acquisition=== In June 2019, Facebook created the [[Diem (digital currency)|Libra Association]], a [[blockchain]] group aiming to launch a [[stablecoin]].<ref name=abtwo/> Based in Switzerland, it soon ran into regulatory hurdles,<ref name=pol/> and in 2020 it rebranded as Diem.<ref name=pol>{{cite web |title=Facebook’s crypto project sold after political backlash |url=https://www.politico.com/news/2022/01/31/diem-facebook-cryptocurrency-meta-00003871 |website=www.politico.com |publisher=[[Politico]] |access-date=19 April 2026}}</ref> It was ready to test its Diem stablecoin in the spring of 2021, and on the brink of approval from the [[Swiss Financial Market Supervisory Authority]] (Finma). However, the final approval needed by the [[US Treasury]] was refused, with the [[Biden administration]] requesting a delay to examine the project further. Writes ''The Financial Times,'' Libra's head of policy, [[Dante Disparte]] "quit in frustration."<ref name=kiran/> Under Diem CEO [[Stuart Levey]], the project was then relocated from Switzerland to the US, and began working with Silvergate to issue the currency.<ref name=kiran/> At the time, Silvergate was a bank partner of [[Coinbase]] and four stablecoins backed by US dollars: [[Paxos (company)|Paxos]], [[Circle (company)|Circle]], [[Gemini (company)|Gemini]], and TrustToken.<ref name=free>{{cite web |title=The bankers turning free-spirited Libra into buttoned-down Diem |url=https://www.americanbanker.com/news/the-bankers-turning-free-spirited-libra-into-buttoned-down-diem |website=www.americanbanker.com |publisher=[[American Banker]] |access-date=19 April 2026}}</ref>
Silvergate Bank partnered with the [[Diem Association]] in May 2021 to launch their stablecoin, with Silvergate to be issuer and reserve manager.<ref name=abtwo/> The Fed and Treasury were informed a launch was scheduled for June 29, 2021. The night beforehand, the US withheld approval. Subsequently, Levey's attempts to schedule meetings with Treasury officials were ignored. The Diem project was cancelled in January 2022, and that month, Silvergate bought Diem's remaining assets to "pursue its own stablecoin plans."<ref name=kiran>{{cite web |title=Facebook Libra: the inside story of how the company’s cryptocurrency dream died |url=https://www.ft.com/content/a88fb591-72d5-4b6b-bb5d-223adfb893f3#selection-2539.0-2551.427 |website=www.ft.com |publisher=[[Financial Times]] |access-date=19 April 2026}}</ref> Silvergate Capital, Silvergate Bank's holding company, purchased Diem's technology assets on January 31, 2022 for $182 million. At the time, Silvergate CEO was Alan Lane.<ref name=abtwo>{{cite web |title=The road ahead for Meta’s Diem under Silvergate Bank’s ownership |url=https://www.americanbanker.com/news/the-road-ahead-for-metas-diem-under-silvergate-banks-ownership |website=www.americanbanker.com |publisher=[[American Banker]] |access-date=19 April 2026}}</ref> As of late 2022, the stablecoin had not yet launched.<ref name="motley-fool-stablecoin" /> ''Barron'''s reported that Silvergate's shares surged after buying the assets from Diem.<ref>{{cite web |title=Silvergate Stock Soars on Deal to Buy Blockchain Assets From Facebook’s Diem |url=https://www.barrons.com/articles/silvergate-stock-diem-blockchain-assets-acquisition-51643707607?eafs_enabled=false |website=www.barrons.com |publisher=[[Barron's]] |access-date=21 April 2026}}</ref> By the start of 2023, however, the bank announced it had shelved any plan to launch its own stablecoin, and had recorded a $196 million loss related to its [[write-off]] of Diem assets.<ref name=nina>{{cite web |title=Silvergate Becomes Takeover Bait As Crypto Bank’s Depositors Flee |url=https://www.forbes.com/sites/ninabambysheva/2023/01/05/silvergate-becomes-takeover-bait-as-crypto-banks-depositors-flee/ |website=www.forbes.com |publisher=[[Forbes]]|access-date=21 April 2026}}</ref>
===FTX exposure, drop in liquidity, and winding down <span class="anchor" id="Liquidation"></span>=== {{See also|Bankruptcy of FTX}} [[File:Silvergate stock price.webp|thumb|260px|Silvergate stock price history]]
In March 2022, Silvergate invested in a $200 million fundraising round for [[Aptos Labs|Aptos]], a cryptocurrency startup founded by ex-Diem employees.<ref name=tiger>{{cite web |title=Ex-Meta employees raise $200M from a16z, Tiger, Multicoin to realize Facebook’s crypto dreams |url=https://techcrunch.com/2022/03/15/aptos-labs-a16z-multicoin-facebook-diem-blockchain/ |website=www.techcrunch.com |publisher=[[TechCrunch]] |access-date=19 April 2026}}</ref> In the first part of 2022, Silvergate made a $205 million loan to the analytics software company [[Microstrategy]], which used the funds to buy bitcoin.<ref name=micro>{{cite web |title=Silvergate Earnings Finally Catching Crypto Winter Chill |url=https://www.forbes.com/sites/emilymason/2022/10/17/silvergate-finally-catching-crypto-winter-chill/ |website=www.forbes.com |publisher=[[Forbes]] |access-date=21 April 2026}}</ref> By November 2022, the bank was led by Lane as CEO and Ben Reynolds as president, while Eisele remained in the leadership as chief credit officer.<ref name="cnbc-ceo">{{Cite web |title=Silvergate CEO reassures users after FTX fallout |url=https://www.cnbc.com/video/2022/11/18/silvergate-ceo-reassures-users-after-ftx-fallout.html |access-date=20 November 2022 |website=CNBC |language=en}}</ref><ref name="leadership-team-yahoo">{{Cite web |title=Silvergate announces changes to its executive team |url=https://finance.yahoo.com/news/silvergate-announces-changes-executive-team-213000118.html |access-date=20 November 2022 |website=finance.yahoo.com|date=November 7, 2022 }}</ref><ref name="san-diego-edu" />
In late 2022—following a fall in cryptocurrency prices and the collapse of many cryptocurrency exchanges and schemes such as [[FTX (company)|FTX]]—concerns were raised about potential effects on Silvergate due to loss of deposits and credit exposure from SEN leverage, as well as potential ramifications of issues for the wider cryptocurrency ecosystem due to Silvergate's key role in it.<ref name="wsj-contagion">{{Cite web |last=Benoit |first=David |date=20 November 2022 |title=Crypto Bank Silvergate Battles FTX Contagion Fears |url=https://www.wsj.com/articles/crypto-bank-silvergate-battles-ftx-contagion-fears-11668910608 |access-date=20 November 2022 |website=Wall Street Journal}}</ref><ref name="motley-fool-bank-run" /><ref name="concerns-yahoo">{{Cite web |title=Shares of Crypto Bank Silvergate Continue to Fall Despite CEO's Remarks |url=https://news.yahoo.com/shares-crypto-bank-silvergate-continue-173156610.html |access-date=20 November 2022 |website=news.yahoo.com|date=November 18, 2022 }}</ref><ref name="bloomberg-ftx">{{Cite news |last=Reyes |first=Mark |date=November 18, 2022 |title=Silvergate Capital Shares Slide as FTX Fallout Attracts Short Sellers |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2022-11-18/silvergate-shares-slide-as-ftx-fallout-attracts-short-sellers |access-date=20 November 2022}}</ref> Some [[short seller]]s raised the prospect of a [[bank run]].<ref name="motley-fool-bank-run" /> The share price of Silvergate had fallen 89% from its November 2021 all-time-high to $25 by 5 December 2022, and its deposits fell to $9.8 billion.<ref name="share-price-yahoo" /><ref name="wsj-contagion" /> Silvergate reported in November 2022 that it had adequate [[liquidity]], that it only held FTX deposits, and that it was not exposed to FTX via lending.<ref name="concerns-yahoo" /><ref name="wsj-contagion" /> Senators [[Elizabeth Warren]], [[Roger Marshall]], and [[John Kennedy (Louisiana politician)|John Kennedy]] requested that the bank explain its relationship to FTX in December 2022.<ref>{{Cite news |last=Turner |first=Matt |date=6 December 2022 |title=Crypto Bank Silvergate Asked by US Senators to Explain FTX Ties |work=Bloomberg |url=https://www.bloomberg.com/news/articles/2022-12-06/crypto-bank-silvergate-si-asked-by-us-senators-to-explain-ftx-ties |access-date=8 December 2022}}</ref> By December 2022 deposits at Silvergate had fallen to $3.8 billion.<ref>{{Cite news |last1=Saini |first1=Manya |last2=Nishant |first2=Niket |last3=Lang |first3=Hannah |date=January 5, 2023 |title=Silvergate Capital shares sink as crypto-related deposits plunge |work=[[Reuters]] |url=https://www.reuters.com/technology/silvergate-capitals-crypto-related-deposits-plunge-fourth-quarter-2023-01-05/ |access-date=5 January 2023}}</ref>
===Liquidation === On March 8, 2023, it was announced that Silvergate Bank would wind down its operations and liquidate.<ref name="liquidation"/> After the liquidation, Silvergate did repay its advances, selling investment securities to do so.<ref name=ab>{{cite web |title=FHLB borrowing share stayed range-bound in 2023 for most |url=https://www.americanbanker.com/news/government-accountability-office-examines-the-fhlbanks |website=www.americanbanker.com |publisher=[[American Banker]] |access-date=1 March 2026}}</ref> As of November 2023, all deposits had been repaid, with banking operations ceasing shortly after that.<ref name=charter/> [[CNBC]] later noted that Silvergate Capital, the owner of the bank, had after 2023 stated that despite the bank run, its operations had "stabilized" and it had the "capability to continue to serve its customers," and said its insolvency was the result of "increased supervisory pressure" on Silvergate and other similar crypto-asset businesses.<ref name=ri>{{cite web |title=Crypto and Trump gang up on FDIC over debanking: ‘Our story is pretty ridiculous’ |url=https://www.cnbc.com/2025/02/15/crypto-trump-gop-leadershipo-gang-up-on-fdic-over-debanking-.html |website=www.cnbc.com |publisher=[[CNBC]] |access-date=1 March 2026}}</ref>
===Investigations and settlements=== The [[Federal Reserve Board]] and [[California Department of Financial Protection and Innovation]] (DFPI) on July 1, 2024, stated that its joint investigation against Silvergate had found deficiencies in the bank's internal transaction monitoring, and Silvergate would be paying out a combined $63 million in penalties to the agencies.<ref name=dfpi>{{cite web |title=Silvergate to Pay $63 Million in Combined Penalties Following Coordinated Investigations by DFPI, Federal Partners |url=https://dfpi.ca.gov/press_release/silvergate-to-pay-63-million-in-combined-penalties-following-coordinated-investigations-by-dfpi-federal-partners/ |website=www.dfpi.ca.govm |publisher=DFPI |access-date=1 March 2026}}</ref> An SEC penalty was levied separately from the $63 million,<ref name=federalreserve>{{cite web |title=Federal Reserve Board fines Silvergate Capital Corporation and Silvergate Bank $43 million for deficiencies in Silvergate’s monitoring of transactions in compliance with anti-money laundering law |url=https://www.federalreserve.gov/newsevents/pressreleases/enforcement20240701a.htm |website=www.federalreserve.gov |publisher=Federal Reserve |access-date=1 March 2026}}</ref> and also on July 1, the SEC announced it had charged Silvergate Capital Corporation for allegedly misleading investors about the strength of its anti-money laundering compliance program, noting it had failed to detect what the SEC called "nearly $9 billion in suspicious transfers among FTX and its related entities." Silvergate settled without admitting to or denying the allegations, paying $50 million to the SEC.<ref name=sec>{{cite web |title=SEC Charges Silvergate Capital, Former CEO for Misleading Investors about Compliance Program |url=https://www.sec.gov/newsroom/press-releases/2024-82 |website=www.sec.gov |publisher=SEC |access-date=1 March 2026}}</ref> Silvergate stated the settlement concluded investigations by the Federal Reserve, DFPI, and SEC.<ref name=charter/> According to Reuters, the $50 million assessed by the SEC was offset by the payments to the Fed and DFPI.<ref name=r>{{cite web |title=Defunct Silvergate Bank's owner settles with regulators over compliance lapses |url=https://www.reuters.com/business/finance/defunct-silvergate-banks-owner-settles-with-regulators-over-compliance-lapses-2024-07-01/ |website=www.reuters.com |publisher=[[Reuters]] |access-date=2 March 2026}}</ref> Also, Silvergate said it was surrendering its bank charter.<ref name=charter>{{cite web |title=Silvergate reaches settlement agreements with the federal reserve, the california department of financial protection and innovation, and the securities and exchange commission |url=https://silvergate.com/ |website=www.silvergate.com |publisher=Silvergate |access-date=1 March 2026}}</ref>
On September 18, 2024, Silvergate Capital filed for [[Chapter 11 bankruptcy]] protection, listing assets between $100 million and $500 million and liabilities between $10 million and $50 million.<ref>{{Cite news |last=Knauth |first=Dietrich |date=2024-09-18 |title=Silvergate Capital enters bankruptcy after crypto bank's shutdown |url=https://www.reuters.com/legal/litigation/silvergate-capital-enters-bankruptcy-after-crypto-banks-shutdown-2024-09-18/ |access-date=2025-07-31 |work=Reuters |language=en}}</ref> In April 2025, the ''Wall Street Journal'' reported that following a request from an activist shareholders, an examiner had been appointed to look into an investigation conducted by a director, concluding it had been tainted by the use of the company's own law firm.<ref name=tainted>{{cite web |title=Silvergate Bankruptcy Probe Tainted by Conflicts, Examiner Says |url=https://www.wsj.com/articles/silvergate-bankruptcy-probe-tainted-by-conflicts-examiner-says-9ca7db7f?gaa_at=eafs&gaa_n=AWEtsqdDke6-HYeVp5bwssVLqsrl5_KSfT_wvjvJc1RQHK3wW6RhFc5_hNDA&gaa_ts=69a4c165&gaa_sig=_i6ZNfKC7EuQ-FSILLns1iO1QHL7OtQzdsTfPLpwtlj_hZCwccLoV1f7bQJbeMz_nwcF5al_CmzQS4QYeqQz6w%3D%3D |website=www.website.com |publisher=Publisher |access-date=1 March 2026}}</ref>
==References== {{reflist|20em}}
==External links== * {{official website|https://silvergate.com}} * [https://cases.stretto.com/silvergate/ Bankruptcy case website] {{Finance links |reuters=SICPQ.PK |sec_cik=1312109 |yahoo=SICPQ |google=SICPQ:OTCMKTS }}
{{2023 United States bank failures}} {{authority control}}
[[Category:1988 establishments in California]] [[Category:2023 disestablishments in California]] [[Category:2019 initial public offerings]] [[Category:American companies disestablished in 2023]] [[Category:Bank failures in the United States]] [[Category:Banks disestablished in 2023]] [[Category:Banks established in 1985]] [[Category:Banks of the United States]] [[Category:Companies formerly listed on the New York Stock Exchange]] [[Category:Companies traded over-the-counter in the United States]] [[Category:Companies that filed for Chapter 11 bankruptcy in 2024]] [[Category:Cryptocurrency companies]] [[Category:Financial services companies disestablished in 2023]] [[Category:Financial services companies established in 1988]]