• Silvergate Capital’s CEO Alan Lane and two other key executives are leaving the firm as part of its liquidation process.
• The firm has faced significant losses due to multiple crypto clients, including the now-defunct Alameda Research and FTX.
• Recent actions, such as tapping the Federal Home Loan Bank for a $4.3 billion loan and selling around $5.2 billion in debt securities, have drawn criticism from US Senators.
Silvergate Executives Depart Amid Wind-Down
Silvergate Capital’s CEO Alan Lane and two other key executives are preparing to leave on Aug. 15th and Sept. 30th, respectively. This is part of the bank’s ongoing voluntary liquidation process which has been their priority for months. Kathleen Fraher will take over as chief transition officer while Andrew Surry will be responsible for principal financial officer duties in lieu of new top-level appointments planned by Silvergate due to liquidation plans.
Significant Losses Due To Crypto Clients
Silvergate’s troubles began after legislators criticized them for failing to control transactions between now-defunct crypto clients Alameda Research and FTX leading to a $1 billion net loss in 2022’s fourth financial quarter which resulted in major clients like Coinbase severing ties with them. Their instant settlement platform, SEN was heavily used by institutional crypto clients but was deemed risky by the Federal Deposit Insurance Corporation since it could introduce liquidity risks into the business model causing users to withdraw $8.1 billion worth of deposits at once during last year’s final fiscal quarter coinciding with the collapse of FTX.
Attempts To Weather The Withdrawals
To weather these withdrawals Silvergate tapped into Federal Home Loan Bank for a $4.3 billion loan and sold around $5.2 billion worth of debt securities that drew scrutiny from US Senators resulting in similar downfalls for other crypto friendly banks such as Silicon Valley Bank and Signature Bank following suit soon after Silvergate’s predicament became apparent in the crypto ecosystem .
Severance Benefits For Executives
The three executives departing from Silvergate will receive severance benefits but won’t be subject to any further compensation from the company according to an Aug 15 SEC filing made by parent company Silvergate Capital outlining their departures as part of this process .
Overall, Silvergate’s wind-down has had far reaching implications in the crypto ecosystem with other banks feeling pressure due to similar circumstances that were brought on by legislators criticizing them for failing to control transactions between certain crypto clients leading up to a massive net loss that forced major players like Coinbase out of business followed up by tapings into federal loans and asset sales that only further stirred up controversy among US senators eventually leading us here with Alan Lane and two other top execs departing from one time known crypto friendly bank – SilverGate Capital .