Order of assessment of civil money penalty: Silvergate ($43 million, AML transaction monitoring)
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.
In the Matter of
Docket No. 24-013-CMP-HC
24-013-CMP-SM
SILVERGATE CAPITAL CORPORATION
La Jolla, California
Order of Assessment of Civil Money
and
Penalty Issued Upon Consent
Pursuant to the Federal Deposit
SILVERGATE BANK
Insurance Act, as Amended
La Jolla, California
WHEREAS, Silvergate Capital Corporation (“Company”), La Jolla, California, is a
registered bank holding company that owns and controls Silvergate Bank (“Bank”), La Jolla,
California, a state-chartered bank that is a member of the Federal Reserve System (collectively,
“Silvergate”);
WHEREAS, the Board of Governors of the Federal Reserve System (“Board of
Governors”) is the appropriate federal banking agency and supervisor of Silvergate, and the
Department of Financial Protection and Innovation of the State of California (“DFPI”) is the
chartering authority and state supervisor of the Bank;
WHEREAS, Silvergate is required to comply with all applicable federal laws, rules, and
regulations relating to anti-money laundering (“AML”) compliance, including the Bank Secrecy
Act (“BSA”) (31 U.S.C. § 5311 et seq.), the rules and regulations issued thereunder by the U.S.
Department of the Treasury (31 C.F.R. Chapter X), and the requirements of Regulation H of the
Board of Governors to report suspicious activity and to maintain an adequate BSA/AML
compliance program (12 C.F.R. §§ 208.62-63) (collectively, the “BSA/AML Requirements”);
WHEREAS, from approximately 2014 through March 2023, Silvergate focused on
providing banking and financial services to foreign and domestic companies engaged in, among
other things, buying and selling crypto-assets;
WHEREAS, in 2017, to facilitate U.S. dollar internal Bank transfers among Silvergate
customers engaged in buying and selling crypto-assets, Silvergate launched the Silvergate
Exchange Network (“SEN”), an internal payments platform that permitted Bank customers
participating in the SEN to make and receive, in near real time, internal Bank transfers of U.S.
dollars to and from other Bank customers participating in the SEN;
WHEREAS, an investigation by the Board of Governors identified deficiencies in
Silvergate’s monitoring of internal transactions through the SEN;
WHEREAS, on May 23, 2023, the Board of Governors, DFPI, and Silvergate mutually
agreed to enter a cease-and-desist order that requires Silvergate to implement the Bank’s self-
liquidation and cessation of operations in a safe and sound manner to protect the Bank’s
depositors and the Deposit Insurance Fund;
WHEREAS, Silvergate has taken appropriate steps to liquidate and wind down the
operations of the Bank in an orderly manner, has repaid all of its deposit liabilities (other than
certain de minimis balances), and does not anticipate any impact on or access to the Deposit
Insurance Fund;
WHEREAS, the Board of Governors and Silvergate have agreed to this Order of
Assessment of a Civil Money Penalty (the “Order”) pursuant to section 8(i)(2)(B) of the Federal
Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. § 1818(i)(2)(B)), for the unsafe
or unsound practices described above; and
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WHEREAS, the boards of directors of the Company and the Bank at duly constituted
meetings adopted resolutions authorizing and directing the undersigned to enter into this Order
on behalf of the Company and the Bank, and consenting to compliance with each and every
provision of this Order by the Company and the Bank, and waiving all rights that the Company
and the Bank may have pursuant to section 8 of the FDI Act, including, but not limited to: (i) the
issuance of a notice of charges on any and all matters set forth in this Order; (ii) a hearing for the
purpose of taking evidence on any matters set forth in this Order; (iii) judicial review of this
Order; and (iv) challenging or contesting, in any manner, the basis, issuance, validity, terms,
effectiveness, or enforceability of this Order or any provision thereof.
NOW, THEREFORE, before the filing of any notices, or taking any testimony or
adjudication of or finding on any issues of fact or law herein, without Silvergate admitting or
denying any allegations made or implied by the Board of Governors in connection herewith, and
solely for the purpose of settling this matter without a formal proceeding being filed and without
the necessity for protracted or extended hearings or testimony pursuant to sections 8(b)(1), (b)(3)
and (i)(2)(B) of the FDI Act (12 U.S.C. § 1818(b)(1), (b)(3) and (i)(2)(B)), it is hereby ordered
that Silvergate pay a civil money penalty as follows:
Assessment of Civil Money Penalty
1. The Board of Governors hereby imposes a civil money penalty on Silvergate in
the amount of $43,000,000.00 for the unsafe or unsound practices described herein. The civil
money penalty shall be remitted at the time of the execution of this Order by Fedwire transfer of
immediately available funds to the Federal Reserve Bank of Richmond, ABA No. 051000033,
beneficiary, Board of Governors of the Federal Reserve System. The Federal Reserve Bank of
Richmond, on behalf of the Board of Governors, shall distribute this sum to the U.S. Department
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of the Treasury, pursuant to section 8(i) of the FDI Act (12 U.S.C. § 1818(i)). This penalty is a
penalty paid to a government agency for a violation of law for purposes of 26 U.S.C. § 162(f)
and 26 C.F.R. § 1.162-21.
Communications
2. All communications regarding this Order shall be sent to:
(a) Richard M. Ashton
Deputy General Counsel
Jason A. Gonzalez
Deputy Associate General Counsel
Board of Governors of the Federal Reserve System
20th & C Streets, N.W.
Washington, D.C. 20551
(b) Mongkha Pavlick
Senior Vice President
Federal Reserve Bank of San Francisco
950 South Grand Avenue
Los Angeles, CA 90015
(c) John Buretta
Partner
Cravath, Swaine & Moore LLP
375 Ninth Avenue
New York, NY 10001
(d) Michael N. Levy
Principal
Ellerman Enzinna Levy PLLC
1050 30th Street NW
Washington, DC 20007
(e) Paris Cribben
General Counsel
Silvergate Capital Corporation
Silvergate Bank
4250 Executive Square, Suite 300
San Diego, CA 92037
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Miscellaneous
3. The provisions of this Order shall be binding on the Company and the Bank, and
each of their institution-affiliated parties, in their capacities as such, and their successors and
assigns.
4. Each provision of this Order shall remain effective and enforceable until stayed,
modified, terminated, or suspended in writing by the Board of Governors.
5. Except as otherwise provided in this paragraph, the Board of Governors hereby
agrees not to initiate any further enforcement actions, including for civil monetary penalties,
against the Company and the Bank, and their successors and assigns, with respect to the conduct
described in the WHEREAS clauses of this Order to the extent known by the Board of
Governors as of the effective date of this Order. This release and discharge shall not preclude or
affect (i) any right of the Board of Governors to determine and ensure compliance with this
Order, (ii) any proceedings brought by the Board of Governors to enforce the terms of this Order,
or (iii) any proceedings brought by the Board of Governors against individuals who are or were
institution-affiliated parties of Silvergate.
6. Except as provided in paragraph 5, the provisions of this Order shall not bar,
estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or
state agency from taking any other action affecting the Company, the Bank, any of their
subsidiaries, or any of their current or former institution-affiliated parties and their successors
and assigns.
7. Nothing in this Order, express or implied, shall give to any person or entity, other
than the parties hereto and their successors hereunder, any legal or equitable right, remedy, or
claim under this Order.
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By Order of the Board of Governors of the Federal Reserve System, effective this fourth
day of June_ 2024.
SILVERGATE CAPITAL BOARD OF GOVERNORS OF THE
CORPORATION FEDERAL RESERVE SYSTEM
By: /s/ Andrew Surry By: /s/ Benjamin W. McDonough
Andrew Surry Benjamin W. McDonough
Chief Accounting Officer Deputy Secretary of the Board
SILVERGATE BANK
By: /s/ Andrew Surry
Andrew Surry
Chief Accounting Officer
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