US-based crypto bank Silvergate Capital is reportedly struggling to avoid a possible shutdown by US regulators. On March 7, 2023, officials from the Federal Deposit Insurance Corporation (FDIC), an independent US agency tasked with overseeing financial institutions for safety, soundness, and consumer protection, have held discussions with Silvergate management to discuss a rescue effort for the company.
 
Earlier last week, the FDIC audit team reviewed the company’s books and records, but no agreement has been reached on a rescue effort for the company. The uncertainty over Silvergate’s financial situation has raised concerns about an impending bankruptcy filing, which could hurt the rest of the industry.
 
Silvergate shares plunged more than 50 percent on the New York Stock Exchange on March 2 to $5.72, while crypto prices took a hit across the board. Within 24 hours of the announcement of the delay in its 10-K annual report, several major crypto companies including Coinbase, Circle, Bitstamp, Galaxy Digital, and Paxos announced the reduction of partnerships with Silvergate. MicroStrategy, Binance, and Tether have also declined meaningful exposure to the bank. At the time of writing, Silvergate shares were trading at USD 5.21, down 70 percent over the past month.
 

Delay in Submission of Reports and Risk-Based Decisions

 
The cause of this situation began when Silvergate Capital Corp announced on Friday, March 3, 2023, that it made a “risk-based decision” to shut down its crypto payments network Silvergate Exchange Network (SEN), two days after the digital asset-focused bank raised doubts about the viability of its business.

 
"With immediate effect, Silvergate Bank has made the risk-based decision to discontinue its Silvergate Exchange Network (SEN) crypto payments network. All deposit-related services remain operational," Silvergate said in a statement posted on its website, as quoted by Yahoo Finance, Monday (6/3/2023).
 
Silvergate also delayed filing its 10-K annual report with the U.S. Securities and Exchange Commission (SEC), causing its stock price to drop 31 percent in after-market trading on Wednesday. The bank's shares hit a record low on Thursday last week, down more than 97 percent from their all-time high in November 2021.
 
Silvergate Exchange Network is one of the bank's most popular offerings, allowing 24-hour transfers between investors and crypto exchanges, unlike traditional bank transfers that often take days to settle. However, Silvergate warned in its filing,

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