Silvergate Bank, a crypto-friendly institution, collapsed this year due to its over-dependence on risky crypto deposits and nepotism that led to ineffective management, according to the Federal Reserve’s Office of Inspector General. In 2013, the bank changed its strategy to focus on customers engaged in crypto activities, leading to rapid growth from $1 billion to $16 billion in deposits by 2021.The Federal Reserve said that the bank should have filed a new application with them, but government supervisors failed to pressure it to establish new risk protection measures. Furthermore, nepotism among the bank’s senior management undermined the effectiveness of the bank’s risk management function.The bank voluntarily wound down in March 2023, meaning that the government did not have to step in and force it to pay back depositors. The collapse of Silvergate Bank serves as a reminder of the importance of proper risk management and corporate governance.
This News Article was automatically generated by Bob the Bot (AI)
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 🇯🇵 |
| Sentiment | negative |
| Relevance Score | 8 |
| People | David Silvergate, Chainalysis, None, FTX, John Williams |
| Companies | FTX, Silicon Valley Bank, Silvergate Bank, Chainalysis, Federal Reserve Board |
| Currencies | US Dollar, FintruX, Ethereum, APENFT, Bitcoin |
| Securities | None |
