Silvergate Bank has agreed to pay $63 million to settle regulatory charges of mismanagement, lack of control and misleading investors, highlighting the importance of effective risks ad management transparency.
Silvergate Bank, once a popular financial institution in the crypto world, has recently got into the trouble. The Bank has agreed to pay $63 million to settle charges with SEC, the Federal Reserve and California’s Department of Financial Protection and Innovation (DFPI). The charges come from mismanagement claims and misinforming investors about the bank’s financial situation.
The Allegations
Silvergate was accused by regulatory agencies for doing many violations. Firstly, the said that the bank failed to manage its funds effectively. This means that the bank didn’t have adequate controls over their authority to ensure everything run smoothly. Second, they were accused of failing to make a clear communication with their investors which make them a risky business. This is major issue because investors require correct information for taking correct decisions.
Specially, the SEC claimed that Silvergate executives new aware of bank’s anti-money laundering system problems but they failed to solve them. SEC also claimed that the bank has misled investors about how well these systems worked.
The Settlement
To make things go right, Silvergate agreed to pay $63 million. This money will be split between 3 regulatory agencies. In addition in the fine, the bank’s former CEO and COO will not be on their current position for next several years.
The Impact of Silvergate
The settlement is a major explode to Silvergate. The bank has already been struggling and this fine will make matters even worse. It sets as a reminder that even banks that focus on new and exciting industries, such as cryptocurrency must stick to the rules and be honest with their investors.
The Silvergate settlement is an important event in the cryptocurrency event. It gives the reminder that even in this new and rapidly evolving industry, the old rules continues to apply. Companies must be well-managed, follow the rules and be transparent with their investors. If they do not follow the rules they may face some consequences.
