The U.S. Federal Reserve has dropped an enforcement action against crypto-friendly Silvergate Bank over a breach of AML regulations.
The enforcement action against Silvergate Bank and its holding company, Silvergate Capital Corporation, has been terminated by the United States Federal Reserve. The institution was fined $43 million by the central bank’s Board of directors this year for failing to comply with anti-money laundering (AML) regulations.
The Federal Reserve concludes its operations
The Federal Reserve has terminated the action against the bank for violating specific regulations, as stated in an announcement on July 26. The bank has concluded its liquidation due to enforcement actions initiated in May 2023—the crypto-frie, which encountered red obstacles resulting in its collapse and the decision to cease operations.
The Board’s enforcement action, which has been in effect since May 2023, guaranteed that Silvergate would liquidate and wound down operations to safeguard the bank’s depositors. Since that time, Silvergate has completed its liquidation and wind-down plan, refunded all deposits to its depositors, and ceased to operate as a bank, according to the Federal Reserve.
The Federal Reserve fined Silvergate Bank $43 million for noncompliance with AML regulations and enforcement action. In addition, the firm was fined by state regulators, bringing the total penalties to $63 million. The bank consented to settle the charges, which included a misrepresentation to shareholders regarding adequate Bank Secrecy Act compliance, which was not the case.
The bank and two executives, Kathleen Fraher and Alan Lane, the former CEO, consented to the settlements without denying or confessing the allegations. “Lane and Fraher, and through them SCC, were aware of the Bank’s significant deficiencies in its BSA/AML compliance program on numerous occasions before November 2022.”
Markets were affected by Silvergate Bank Collapse
The crypto-friendly Silvergate Bank collapsed early last year, resulting in a decline in sentiment. This collapse occurred after the implosion of FTX the previous year, which resulted in the loss of billions of dollars in assets for investors. As a result of these incidents, market sentiments were undermined, and crypto prices remained low until institutional adoption increased in Q4 2023. The BTC price reached an all-time high above $73,000 this year due to the approval of spot Bitcoin ETFs, which increased institutional investment. Bitcoin (BTC) is $67,376 at the time of publication.
