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02/07/24
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Silvergate Bank Agrees to Settle With U.S. SEC, Fed and California’s DFPI
On July 1, California’s Department of Financial Protection and Innovation (DFPI) revealed Silvergate Bank’s agreement to pay $63 million to settle regulators for deficiencies in its internal transaction monitoring.
The United States Securities and Exchange Commission’s (SEC) penalty assessments and the Board of Governors of the Federal Reserve System’s parallel consent order led to the DFPI’s consent order against Silvergate Bank.
The bank is required to pay $20 million to the DFPI, $43 million to the Federal Reserve Board, as well as penalties of $50 million assessed by the SEC that will be offset by Silvergate’s payments to the DFPI and the Federal Reserve Board.
According to the DFPI, the bank started providing services to foreign and domestic digital financial asset firms like crypto exchanges ten years ago, providing a crucial link between cryptocurrency assets and access to the USD. Last year, plans for voluntary liquidation of the bank were revealed, followed by the DFPI and Federal Reserve Board issuing a joint cease and desist order to facilitate the implementation.
Similarly, the SEC published a press release yesterday noting that Silvergate Capital Corporation and some officials have been charged with “misleading investors about the strength of the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program and the monitoring of crypto customers, including FTX, by Silvergate’s wholly owned subsidiary, Silvergate Bank.”
Furthermore, the SEC charged them with “misleading investors about the company’s losses from expected securities sales following FTX’s collapse.” They entered into an agreement with the commission, except for one official.
They did not admit or deny the allegations and Silvergate agreed to pay a $50 million civil penalty. “All the settlements are subject to court approval, and Silvergate’s payment may be offset by penalties paid to the Board of Governors of the Federal Reserve System (FRB) and/or the California Department of Financial Protection and Innovation (DFPI),” said the SEC.
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