The California Department of Financial Protection and Innovation has reached a $20 million settlement with the parent company of Silvergate Bank following the bank’s failure to meet anti-money-laundering standards. The crypto-focused bank, which held $11 billion in assets, was liquidated in 2023 after regulatory developments and a significant drop in stock value.
Despite efforts to stabilize the bank through job cuts and workforce reductions, Silvergate faced charges from multiple regulatory bodies for anti-money-laundering failings and misleading disclosures about the effectiveness of their program. The recent $63 million settlement included payments to the Federal Reserve and California’s regulator.
The SEC alleged that Silvergate misled shareholders and the public about the adequacy of its AML program and failed to identify and investigate suspicious transfers worth nearly $9 billion by FTX. FTX, once a top crypto exchange platform, faced its downfall in 2022 due to lawsuits and claims of fraudulent activity.
Silvergate’s popularity among crypto companies was due to its Silvergate Exchange Network (SEN), which facilitated fund transfers. However, the bank’s failure to monitor the system led to deficiencies in its BSA and AML program, as highlighted by government examiners.
The settlement will conclude investigations by regulatory bodies and allow Silvergate’s voluntary wind-down to come to an end. Despite the loss of Silvergate, the crypto industry continues to thrive, with greater adoption by household brands and advancements in blockchain technology benefiting various sectors.
While the industry may have been impacted by Silvergate’s downfall, its adaptability and resilience have ensured its continued popularity among investors and tech enthusiasts.
