The story of Silvergate Bank has always had two versions. In one, a reckless bank gorged on crypto deposits, failed to monitor over $1 trillion in transactions, and got what it deserved. In the other, a functioning institution with superior technology was systematically dismantled by regulators who wanted to sever crypto’s connection to the traditional banking system.

Silvergate Bank announced its voluntary wind-down on March 8, 2023. The Silvergate Exchange Network, known as SEN, allowed crypto firms to move US dollars in real time, 24/7, bypassing the glacial pace of traditional wire transfers.

SEN was shut down on March 3, 2023, five days before Silvergate announced its broader liquidation. At the time SEN went dark, the bank was technically solvent. It could still pay its depositors.

The catalyst was a classic bank run. After FTX imploded in November 2022, crypto companies that had parked their money at Silvergate started pulling deposits at speed. Silvergate committed to repaying all deposits as part of its orderly wind-down. No FDIC receivership. No depositor losses.

The SEC revealed that Silvergate’s transaction monitoring system failed to review more than $1 trillion in transactions processed through SEN between November 2022 and January 2023. Regulatory actions eventually produced civil penalties totaling roughly $63 million, with $50 million of that coming directly from the SEC against Silvergate for failures related to anti-money laundering controls and public disclosures. An investor class-action lawsuit added another $37.5 million settlement, with plaintiffs alleging the bank had misrepresented its AML and customer vetting practices.