(Reuters) – U.S. federal officials have been discussing with Silvergate Capital Corp’s management to avoid a shutdown, Bloomberg News reported on Tuesday, citing people familiar with the matter.
Shares of the cryptocurrency-focused bank rose about 5% in after-market trading.
Last week, the bank warned it was delaying its annual report and said it was evaluating its ability to operate as a going concern.
The company late on Friday said that effective immediately it made a “risk-based decision” to discontinue the Silvergate Exchange Network, which enabled round-the-clock transfers between investors and crypto exchanges, unlike traditional bank wires, which can often take days to settle.
U.S. regulators have been sent to the headquarters of Silvergate as the company looks for a way to stay in business, the report said.
One possible option involves lining up crypto-industry investors to help Silvergate shore up its liquidity, the report said.
Federal Deposit Insurance Corp (FDIC) examiners were authorized to go to Silvergate’s offices by the Federal Reserve, which is its main federal overseer and the examiners are reviewing the company’s books and records, Bloomberg News added.
FDIC examiners arrived at the company’s La Jolla, California offices last week, the people told Bloomberg News, and added the company has not made a decision on how to deal with its deepening financial turmoil.
FDIC and Silvergate were not immediately available for comments.
Silvergate had been trying to ease investor concerns over its future as it reported a $1 billion loss for the fourth quarter after the collapse of Sam Bankman-Fried’s crypto exchange FTX in November drove investors to pull out $8 billion in deposits from the bank in the last three months of the year.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel)
