Federal Reserve Examiners Failed to Provide Proper Oversight as Silvergate Transformed Into a Risky Crypto Bank, Inspector General Finds

Silvergate Bank transformed from a community lender to a crypto bank without proper oversight from Federal Reserve examiners, according to an inspector general report.
The bank was not required to register as a different type of institution despite pivoting to focus on digital assets, which examiners failed to demand.
Examiners did not take aggressive enough action on Silvergate's unchecked growth, volatile funding, and weaknesses in key controls, per the report.
The report found Silvergate had ineffective senior management and nepotism issues under its former CEO.
Though Silvergate didn't technically fail, the report made recommendations for how examiners should handle similar high-risk situations going forward.

Silvergate Bank transformed from a community lender to a crypto bank without proper oversight from Federal Reserve examiners, according to an inspector general report.
The bank was not required to register as a different type of institution despite pivoting to focus on digital assets, which examiners failed to demand.
Examiners did not take aggressive enough action on Silvergate's unchecked growth, volatile funding, and weaknesses in key controls, per the report.
The report found Silvergate had ineffective senior management and nepotism issues under its former CEO.
Though Silvergate didn't technically fail, the report made recommendations for how examiners should handle similar high-risk situations going forward.