CEO of Crypto-Focused Bank Silvergate Addresses Insolvency Concerns – Here’s What He Said

Author

Fredrik Vold

Author

Fredrik Vold

Author Profile

Share

Copied

Last updated: 

June 26, 2023

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

The CEO of the crypto-friendly bank Silvergate, Alan Lane, has addressed concerns that the bank could be near insolvency, saying the bank has “a resilient balance sheet and ample liquidity.”

The statement from the CEO was made in a public letter published on Monday, where Lane made it clear that although the recent period has been “turbulent” for crypto, customer deposits at his bank remains safe.

“In addition to the cash we carry on our balance sheet, our entire investment securities portfolio can be pledged for borrowings at the Federal Home Loan Bank, other financial institutions, and the Federal Reserve Discount Window – and can ultimately be sold should we need to generate liquidity to satisfy customer withdrawal request,” Silvergate’s Lane wrote in the letter.

“We intentionally carry cash and securities in excess of our digital asset related deposit liabilities,” he added.

The CEO further made it clear that Silvergate is a business designed to function under all market conditions, and not just during bull markets.

“We purpose-built this business to support our customers not only during periods of growth but also in periods of volatility,” he said.

“Significant due diligence” done on FTX

Commenting on the situation surrounding the collapse of FTX and the bank’s exposure to it, Lane said Silvergate takes risk management and compliance with regulations “extremely seriously.”

He added that this was also done in the case of FTX and the affiliated trading firm Alameda Research, noting that “significant due diligence” was conducted on FTX and affiliated entities during the onboarding process.

Lane also said that risk management and compliance continued to be a key focus for the bank during its relationship with FTX and Alameda. He pointed out that there were no signs of any irregular transactions made by FTX or Alameda during their time as Silvergate clients.

“When Silvergate received payments directed to Alameda Research and credited it to the account of the same name, this was consistent with the instructions from the sender of the wire and industry practice,” the letter said.

Whenever unexpected or potentially concerning activity was detected related to an account, this was investigated, and – if necessary – reported in accordance with federal regulations, the letter said.