Silvergate Capital: Crypto Bank Parent Liquidates After $8B Deposit Run

Silvergate Capital Corporation, the holding company for the crypto-focused bank that processed billions in digital-asset settlement volume before the 2022 market downturn, completed a liquidating chapter 11 in the U.S. Bankruptcy Court for the District of Delaware and emerged on March 31, 2026. The company filed its petition on September 17, 2024 under lead case number 24-12158 to wind down the corporate shell after a deposit run and a state-supervised liquidation had already shuttered the bank. The chapter 11 did not try to save an operating institution; it marshaled remaining cash, resolved regulatory and securities exposure, and stood up a liquidation trust to pursue claims against FTX and other third parties, as set out in the voluntary petition, first day declaration, and disclosure statement.

The cases centered on distributing a fixed pool of cash among preferred and common stockholders rather than restructuring debt. The first day declaration reported approximately $163.1 million in cash and cash equivalents, remaining technology assets tied to a blockchain-based payment network, and unliquidated claims against third parties. The confirmed plan established a liquidation trust whose beneficial interests run first to preferred stockholders and second to the reorganized debtor, while common stock was reinstated under a settlement, as approved in the confirmation order entered November 13, 2025. CryptoSlate described the case as the close of an 18-month wind-down, and Law360 framed it as a liquidation with no expected recovery for common stockholders.

Debtor(s)	Silvergate Capital Corporation (3 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	24-12158
Judge	Hon. Karen B. Owens
Petition Date	September 17, 2024
Confirmation Date	November 13, 2025
Effective Date	March 31, 2026
Cash and Cash Equivalents	Approximately $163.1 million
Funded Debt (as of Petition Date)	Approximately $18.3 million principal plus accrued interest
Preferred Liquidation Preference	$1,000 per share, $200 million total
Claims Agent	Stretto, Inc.

Open the public case profile for docket context, hearings, advisors, and plan updates.

Crypto Banking Pivot and Deposit Concentration

Silvergate Capital Corporation is a Maryland bank holding company formed in 1986 and headquartered in La Jolla, California, as described in the first day declaration. Silvergate Bank operated for years as a traditional community bank before pivoting toward digital asset customers. The bank developed the Silvergate Exchange Network, a platform for 24/7 payments between crypto market participants, and built a deposit base concentrated among crypto exchanges, trading firms, and digital asset platforms.

By late 2021, crypto firm deposits exceeded 90% of total deposits, according to the first day declaration, concentrating the bank's funding in a single industry's liquidity cycle. That concentration left the deposit base exposed when the digital-asset market reversed in 2022, and the bank ultimately wound down operations under supervisory pressure rather than continue under mounting outflows.

The debtor group reflects the holding company structure. Silvergate Capital Corporation served as the parent, Silvergate Bank was renamed Silvergate Liquidation Corporation after entering voluntary liquidation, and Spring Valley Lots, LLC functioned as a real estate subsidiary, as described in the voluntary petition. The chapter 11 filing addressed residual assets and liabilities at the holding company level after regulators had already placed the bank into liquidation.

Deposit Run and 2022 Securities Losses

Silvergate's deposit base contracted sharply during the 2022 crypto market stress. The first day declaration reports that non-interest-bearing deposits fell from approximately $12.005 billion on September 30, 2022 to approximately $3.852 billion on December 31, 2022, a decline of more than $8 billion in a single quarter.

The mid-2022 failures of Three Arrows Capital, Voyager, and Celsius, followed by the November 2022 failure of FTX, drove the outflows, according to the first day declaration. CryptoSlate reported that client withdrawals exceeded $8 billion after FTX's failure.

Meeting those withdrawals forced the bank to sell securities. The first day declaration states that rising interest rates contributed to losses on those sales, producing a 2022 net loss of approximately $948.7 million. The bank stopped accepting deposits in March 2023. Law360 described the bankruptcy as a coda to the sector's 2022 turmoil, filed two years after the industry's downturn.

Regulatory Liquidation and Settlements

Regulatory actions drove Silvergate's wind-down. The first day declaration states that the Federal Reserve and the California Department of Financial Protection and Innovation entered a cease-and-desist order on May 23, 2023 requiring submission of a liquidation plan, which regulators approved on October 2, 2023. The intensified scrutiny followed January 2023 federal banking-agency guidance on crypto-asset risks.

The bank stopped accepting deposits in March 2023 and entered voluntary liquidation under DFPI supervision. Silvergate Bank was renamed Silvergate Liquidation Corporation on July 5, 2024 and relinquished its charter on July 8, 2024, according to the first day declaration. By the September 2024 petition date, the bank had ceased operating as a regulated institution.

In July 2024, the company settled with regulators. The first day declaration reports a $43 million settlement with the Federal Reserve, a $20 million settlement with the California DFPI, and a $50 million settlement with the SEC, with the SEC penalty fully offset by the Federal Reserve and DFPI payments. The declaration references allegations of shortcomings in anti-money laundering compliance and disclosure issues tied to crypto risk management. The Federal Reserve later terminated its enforcement action against the company on December 19, 2024. Silvergate executives publicly attributed the bank's failure to pressure from the Federal Reserve, FDIC, and OCC.

Capital Structure and Residual Assets

The first day declaration reported approximately $163.1 million in cash and cash equivalents as of the declaration date, along with intellectual property and technology assets related to a blockchain-based payment network acquired from the Diem Group in January 2022. The declaration also identified potential claims and causes of action against third parties, described as having uncertain value, plus net operating loss carryforwards retained at the holding company.

Funded debt was modest relative to the bank's peak deposit base, and no DIP financing was needed because the estate was funded from cash on hand. The first day declaration reported approximately $18.3 million of funded debt as of the petition date, consisting of about $14.79 million in 2001 subordinated debentures and about $3.49 million in 2005 subordinated debentures, each including accrued and unpaid interest. Law360 reported that the plan was expected to repay bondholders and to provide some distributions to preferred equity while common stockholders were not expected to receive cash recoveries.

The disclosure statement identifies the liquidation trust as the primary vehicle to monetize these residual assets and the unliquidated claims against FTX and other third parties, with the trust's beneficial-interest waterfall and class treatment set out in the confirmed plan.

Liquidation Trust, Class Treatment, and the Common Stock Settlement

The first amended disclosure statement describes a plan that establishes a liquidation trust to hold remaining assets and pursue claims. The trust issues beneficial interests in two priorities: first to preferred stockholders, and second to the reorganized debtor, which retains Diem-related assets and net operating losses. The plan also establishes a data retention and production reserve to fund record-retention, regulatory-response, and litigation-discovery obligations that continue after the bank's operations ceased.

The confirmation order entered on November 13, 2025 approved the plan, including releases, exculpation, and injunctions in Article IX. Class 5 (indemnified individuals) and Class 8 (preferred stockholders) voted to accept the plan, and Class 10 (section 510(b) claims) was deemed to reject. Law360 reported that the Delaware bankruptcy court approved the plan with all objections resolved. Class treatment under the disclosure statement is summarized below.

Class	Description	Status	Treatment
Class 1	Other Priority Claims	Unimpaired	Deemed accept
Class 2	Secured Claims	Unimpaired	Deemed accept
Class 3	General Unsecured Claims	Unimpaired	Deemed accept
Class 4	Subordinated Notes Claims	Unimpaired	Deemed accept
Class 5	Indemnified Individuals Claims	Impaired	Voting class; accepted
Class 6	Intercompany Claims	Mixed	Deemed accept or reject
Class 7	Intercompany Interests	Mixed	Deemed accept or reject
Class 8	Preferred Stock Interests	Impaired	Voting class; accepted
Class 9	Common Stock Interests	Unimpaired	Reinstated under settlement
Class 10	Section 510(b) Claims	Impaired	Deemed reject
Class 11	Bhatia Litigation Class Claims	Unimpaired	Deemed accept

The 2001 and 2005 subordinated debentures fall in the Subordinated Notes class, treated as unimpaired and deemed to accept, consistent with the expectation that bondholders would be repaid in full under the liquidation plan. Preferred stockholders receive first-priority liquidation trust interests, but the disclosure statement states that distributions are not expected to satisfy the full $200 million liquidation preference.

Common Stock Settlement. Rather than cancel common equity, the plan reinstated it under a settlement reached with the holders who had pressed for an examiner and broader value for junior stakeholders. The disclosure statement describes a July 1, 2025 term sheet among Stilwell Activist Investments and Exploration Capital Fund LP, as the common stock sponsors, an ad hoc preferred stockholder group representing roughly 63% of preferred interests, and the debtors. The settlement reinstated common stock for the reorganized debtor's continued existence while preserving the preferred holders' first-priority position, though external reporting indicated no cash recoveries were expected for common stockholders.

Examiner Report and the Global Settlement

The path to confirmation ran through a contested examiner investigation that ultimately folded into a global settlement of securities and indemnification disputes.

Examiner appointment. Stilwell Activist Investments, a common stockholder, sought a broader investigation into potential claims against company insiders and moved in October 2024 for appointment of an examiner. Over the debtors' opposition, the court entered an examiner order in December 2024 and appointed Stephanie Wickouski as examiner on January 31, 2025. Her mandate, as described in the disclosure statement, was limited to reviewing the independence and thoroughness of the special investigation committee that the board had formed in August 2022 to examine claims against directors and officers.

Examiner findings. Wickouski's report, filed under seal in April 2025, identified concerns about the scope of management's investigation. The examiner concluded the committee's work was deficient in significant ways and, at best, incomplete because it did not weigh the settlement value of estate claims, did not fully probe the directors' and officers' knowledge regarding the Silvergate Exchange Network gap and anti-money-laundering controls, and did not analyze potential breach-of-duty-of-care claims against named former executives. The report also faulted the committee for overlooking the bankruptcy-law standard governing releases of estate claims.

Global Settlement. In May 2025, the debtors reached an investor deal that paused the examiner dispute and cleared the path toward confirmation. The court approved the global settlement on May 13, 2025, resolving the securities class action, the directors-and-officers indemnification claims, and related disputes in a single framework. The indemnification component was funded from estate cash and an additional D&O policy tied to a Department of Justice investigation; Morrison & Foerster, representing the directors and officers, described the outcome as a favorable settlement for its clients.

Securities class action. The Bhatia securities class action, which alleged that Silvergate and former chief executive Alan Lane aided FTX's misuse of customer funds, settled for $37.5 million. The settlement drew $27.5 million from remaining D&O insurance, $4.68 million from the underwriter defendants, and $5.32 million from preferred-equity distributions. A federal judge granted final approval on September 3, 2025, and a separate fund was established for class members. Law360 reported that the investor settlement received final sign-off within the chapter 11 framework.

Word of God litigation. A related action by Word of God Fellowship, filed in June 2023 and seeking at least $25 million tied to funds deposited with FTX through Silvergate, was estimated by the bankruptcy court at $0 and dismissed with prejudice on May 20, 2025, as described in the disclosure statement. The dismissal released reserved funds into the amount distributable to preferred stockholders.

NYDIG Claims Defeat and FTX Litigation Reserve

NYDIG Servicing LLC asserted secured claims against Silvergate based on an alleged agreement to sell a loan portfolio, and the dispute went to trial. After a July 2025 trial, the Delaware bankruptcy court denied the roughly $89 million claim, ruling that Silvergate had not entered a binding agreement to sell the loan to the bitcoin-focused firm. The claims were disallowed and expunged in August 2025, a result that also mooted NYDIG's separate effort to expand the examiner's scope and cleared a condition affecting the reorganized debtor's retention of assets under the plan.

The estate's most valuable contingent recovery runs against the FTX bankruptcy estates. The disclosure statement describes cross-claims in which Silvergate asserted fraud, breach of contract, indemnification, civil RICO, and setoff against the FTX debtors, while the FTX estates asserted aiding-and-abetting and unjust-enrichment claims against the Silvergate entities. Both sets of claims are unliquidated, and the plan establishes an FTX disputed claims sub-reserve that preserves setoff rights and leaves prosecution to the liquidation trustee.

Separately, FTX and Alameda Research customers pursued a civil class action in the Southern District of California alleging the bank aided fraudulent transfers. The parties reached a $10 million settlement in December 2025, with court approval sought to resolve the customer claims.

Professional Retentions and Post-Confirmation Status

The debtors staffed the cases with co-counsel Richards, Layton & Finger and Cravath, Swaine & Moore, financial advisor AlixPartners, and special counsel including Sheppard Mullin Richter & Hampton and Ellerman Enzinna Levy, with Ross Aronstam & Moritz serving as additional counsel, as reflected across the case professionals described in the disclosure statement. Morrison & Foerster separately represented the directors and officers in the indemnification and securities matters. Stretto serves as claims and noticing agent under the claims agent retention order.

The examiner side carried its own professionals. Stephanie Wickouski retained Willkie Farr & Gallagher, which waived its fees, along with Delaware counsel Bayard and financial advisor Pivot Group, and the parties resolved all examiner fees and expenses under a capped work-plan budget approved by the court in December 2025. The court extended the debtors' exclusive periods during the case, with the fourth exclusivity extension approved in October 2025 as the plan moved toward confirmation.

Following confirmation, the estate continued filing monthly operating reports and interim fee applications into 2026 while the liquidation trust took shape. The holding company's January 2026 operating report showed ending cash of about $42.3 million and no full-time employees, and its February 2026 report, the final monthly filing before the effective date, reported cash of about $36.0 million against roughly $24.5 million of prepetition liabilities subject to compromise.

During that period the estate resolved one of its larger remaining claim disputes. Centerview Partners had filed three proofs of claim arising from a March 2023 engagement letter, asserting up to $6.2 million and backed by a $7.611 million disputed-claims reserve. By a stipulation approved March 24, 2026, Centerview received an allowed $3.0 million general unsecured claim in full satisfaction, and the reserve balance was released into the distribution waterfall.

The debtors filed a modified plan on March 26, 2026 that left the core preferred and common stock economics unchanged but added an alternative to the Department of Justice-related D&O coverage: the required preferred stockholders could opt out of purchasing the DOJ insurance policy and instead fund a $15 million reserve to satisfy DOJ-related indemnification claims.

The plan went effective on March 31, 2026, transferring remaining assets and claims into the liquidation trust and triggering the post-effective bar dates: an administrative expense and rejection-damages deadline of April 30, 2026 and a professional fee claim bar date of May 15, 2026. The same day the debtors filed a motion for a final decree to consolidate administration. On April 16, 2026 the court closed the Silvergate Capital and Silvergate Liquidation Corporation cases and left Spring Valley Lots, LLC open as the "Remaining Case" to administer the liquidation trust, the reorganized debtor, and residual claims.

Following the May 15, 2026 fee bar date, the court entered an omnibus final fee order on June 12, 2026 awarding approximately $26.1 million in fees and $751,928 in expenses across nine professionals. Cravath, Swaine & Moore received the largest award, with Richards, Layton & Finger second.

Professional	Final Fees	Final Expenses
Cravath, Swaine & Moore LLP	$14,514,920.75	$599,042.89
Richards, Layton & Finger, P.A.	$5,578,036.50	$128,945.20
AlixPartners, LLC	$2,423,093.50	$0.00
Ellerman Enzinna Levy PLLC	$1,644,708.40	$0.00
Sheppard, Mullin, Richter & Hampton LLP	$1,283,953.25	$11,985.20
Stephanie Wickouski / Pivot Group (Examiner)	$372,183.43	$40.02
Ross Aronstam & Moritz LLP	$244,013.50	$11,198.16
Bayard, P.A.	$27,101.00	$716.57
Stretto, Inc.	$11,804.40	$0.00
Total	$26,099,814.73	$751,928.04

On the individual enforcement side, former chief risk officer Kate Fraher settled SEC charges for $250,000 in May 2026, resolving AML compliance and disclosure allegations tied to the bank's crypto client operations. Fraher publicly maintained that the bank's closure resulted from regulatory pressure rather than operational failure.

Key Timeline

Date	Event
1986	Silvergate Capital Corporation formed in Maryland
Late 2021	Crypto firm deposits exceeded 90% of total deposits
Mid-2022	Three Arrows Capital, Voyager, and Celsius failures
September 30, 2022	Non-interest-bearing deposits about $12.005 billion
November 2022	FTX failure triggers deposit run
December 31, 2022	Non-interest-bearing deposits about $3.852 billion
2022	Net loss of about $948.7 million from securities sales
March 2023	Silvergate Bank stops accepting deposits
May 23, 2023	Cease-and-desist order required liquidation plan
October 2, 2023	Liquidation plan approved by regulators
July 5, 2024	Bank renamed Silvergate Liquidation Corporation
July 8, 2024	Bank relinquished its charter
July 2024	Regulatory settlements with Fed, DFPI, and SEC
September 17, 2024	Chapter 11 petitions filed
October 2024	Stilwell moves for appointment of an examiner
January 31, 2025	Stephanie Wickouski appointed examiner
April 2025	Sealed examiner report filed
May 13, 2025	Court approves global settlement; $37.5M securities settlement
May 20, 2025	Word of God Fellowship dismisses litigation with prejudice
July 1, 2025	Common stock settlement term sheet signed
August 2025	NYDIG secured claims disallowed and expunged
September 3, 2025	Final approval of $37.5M securities settlement
September 5, 2025	First amended plan and disclosure statement filed
November 13, 2025	Confirmation order entered
December 2025	FTX customer civil class action $10M settlement reached
March 24, 2026	Centerview Partners claims settled; $3.0M allowed, reserve released
March 26, 2026	Modified plan adds DOJ insurance reserve alternative
March 31, 2026	Plan effective date; company emerged from chapter 11
April 16, 2026	Court closes two cases; Spring Valley Lots remains as Remaining Case
April 30, 2026	Administrative expense and rejection-damages bar date
May 15, 2026	Professional fee claim bar date
May 2026	Former CRO Kate Fraher settles SEC charges for $250,000
June 12, 2026	Omnibus final fee order: ~$26.1M fees, $751,928 expenses

Frequently Asked Questions

What was Silvergate Capital Corporation?

Silvergate Capital Corporation was a Maryland bank holding company formed in 1986 and headquartered in La Jolla, California, with Silvergate Bank as its operating subsidiary, as described in the first day declaration.

Why did Silvergate file for chapter 11 in 2024?

The first day declaration describes a rapid deposit run following the 2022 crypto market downturn, a regulatory liquidation process that required a wind-down, and a decision to use chapter 11 to complete an orderly distribution of remaining assets.

How large was the deposit run?

Non-interest-bearing deposits fell from about $12.005 billion at September 30, 2022 to about $3.852 billion at December 31, 2022, a decline of more than $8 billion in one quarter, per the first day declaration.

What did the examiner find?

Examiner Stephanie Wickouski's sealed report identified concerns that the special investigation committee's review of director and officer claims was deficient and incomplete, including its handling of estate-claim settlement value and release standards.

What did the global settlement resolve?

The settlement approved on May 13, 2025 resolved a $37.5 million securities class action and the directors-and-officers indemnification claims, with the securities portion receiving final approval on September 3, 2025.

What happened to the NYDIG claims?

The Delaware bankruptcy court denied NYDIG's roughly $89 million secured claim after a July 2025 trial, finding no binding agreement to sell the loan, and the claims were disallowed and expunged in August 2025.

What happens to preferred and common stockholders?

Preferred stockholders receive first-priority liquidation trust interests, but the disclosure statement notes distributions are not expected to satisfy the full $200 million liquidation preference; common stock was reinstated under a settlement, though no cash recoveries were expected for common.

What regulatory settlements were paid?

The debtors reported settlements of $43 million with the Federal Reserve, $20 million with California DFPI, and $50 million with the SEC, with the SEC payment offset by the other two settlements, as stated in the first day declaration.

Who is the claims agent for the Silvergate cases?

Stretto, Inc. serves as the claims and noticing agent, as authorized in the claims agent retention order. The March 2025 solicitation and confirmation process ran through Stretto's case-specific claims register and noticing role.

For related coverage, see ElevenFlo's reporting on the Celsius Network chapter 11, the Terraform Labs liquidating plan, and the TrueUSD reserve crisis across four crypto bankruptcies.