US Federal Reserve Drops Enforcement Action Against Silvergate Bank
Highlights
- The Federal Reserve has dropped the enforcement action against Silvergate Bank.
- The board fined the institution $43 million over a breach of AML rules.
- Silvergate’s collapse as well as other factors plunged sentiments last year.
The United States Federal Reserve has announced the termination of its enforcement action against Silvergate Bank alongside its holdings company Silvergate Capital Corporation. This year, the board of the central bank fined the institution $43 million over non-compliance with anti-money laundering (AML) regulations.
Federal Reserve Ends Action
According to a July 26 announcement, the Federal Reserve has terminated the action against the bank for breach of certain regulations. The bank has completed its liquidation following enforcement actions brought in May 2023. The crypto-friendly institution faced headwinds leading to an eventual collapse and a decision to wind down.
“The Board’s enforcement action, which has been in effect since May 2023, ensured that Silvergate would liquidate and wind down operations in a manner that protected the bank’s depositors. Since that time, Silvergate has completed its liquidation and wind-down plan, has paid back all deposits to its customers, and no longer functions as a bank,” the Federal Reserve wrote.
Apart from the enforcement action, the Federal Reserve fined Silvergate Bank $43 million for noncompliance with AML regulations. Alongside this, state regulators also fined the firm raising total fines to $63 million. The bank agreed to settle the charges which included a misrepresentation to shareholders about having proper Bank Secrecy Act compliance when it was not the case.
The bank alongside two executives Alan Lane, the former CEO, and Kathleen Fraher agreed to the settlements without admitting or denying the allegations. “On several occasions before November 2022, Lane and Fraher – and through them SCC – became aware that the Bank had serious deficiencies in its BSA/AML compliance program.”
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Silvergate Bank Collapse Impacted Markets
The early part of last year was plagued with declining sentiments as the crypto-friendly Silvergate Bank collapsed. This followed the implosion of FTX the previous year which saw investors lose billions in assets. These incidents plunged market sentiments as crypto prices remained low until growing institutional adoption in Q4 2023. The approval of spot Bitcoin ETFs this year heightened institutional investment pushing the BTC price to a new all-time high above $73,000. At press time, BTC price stands at $67,376.
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