Crypto Chaos: FDIC Officials Swarm Silvergate Capital In Desperate Bid To Avoid Shutdown

U.S. regulators have been sent to the headquarters of Silvergate Capital Corp. SI as the cryptocurrency-friendly bank struggles to find a solution to stay in business.

The Federal Deposit Insurance Corp. (FDIC) officials have been discussing ways to avoid a shutdown with Silvergate's management, Bloomberg reported, quoting sources.

One option being considered is to line up cryptocurrency investors to help shore up the bank's liquidity.

FDIC examiners were authorized to go to the bank's offices by the Federal Reserve, said one of the sources.

The lender has yet to decide on how to deal with its financial turmoil, and the involvement of the FDIC and the Federal Reserve shows the urgency of the situation.

Deposits from the bank's clients are insured by the government, making the regulator's role crucial in any potential solution.

Also Read: Silvergate Exchange Shutdown: Are Stablecoins Becoming The New Crypto Kings?

The involvement of regulators does not necessarily mean that the bank cannot navigate its troubles without them, according to one source.

As of Dec. 31, Silvergate's deposits totaled $6.3 billion, less than half the $13.2 billion reported in September.

FDIC examiners are currently reviewing the bank's books and records.

Silvergate's troubles started when it was hit hard by the collapse of crypto exchange FTX, which forced the bank to sell billions of dollars worth of assets to stabilize its balance sheet.

The bank reported a $1 billion loss last quarter and recently announced that it was discontinuing its flagship crypto payments network after clients distanced themselves from the bank amid increasing uncertainty.

A representative for Silvergate did not respond to requests for comment, while the FDIC declined to comment on "open and operating institutions."

Read Next: Is Silvergate's Fall Certain? Industry Experts React To Cryptocurrency Bank's Problems

Photo: T. Schneider via Shutterstock