Silvergate Capital: Crypto Bank Parent Liquidates After $8B Deposit Run
Silvergate Capital Corporation, the parent of crypto-focused Silvergate Bank, filed chapter 11 in September 2024 to complete a wind-down after an $8 billion deposit run following the 2022 crypto collapse. The bank relinquished its charter in July 2024 after regulatory settlements totaling $63 million. The liquidation trust preserves FTX litigation claims.
Silvergate Capital Corporation filed chapter 11 on September 17, 2024 in the U.S. Bankruptcy Court for the District of Delaware to complete a wind-down of its former crypto banking franchise. The filing followed a rapid contraction in its deposit base during the 2022 crypto market collapse and a regulatory liquidation process that culminated in the bank relinquishing its charter in July 2024, as described in the voluntary petition and first day declaration. Court filings describe a holding company that shifted from traditional banking toward the digital asset sector, experienced a severe deposit run after multiple crypto firm failures, and then moved into a structured liquidation with a chapter 11 plan, liquidation trust, and residual asset strategy in the first day declaration and disclosure statement.
The cases were structured around maximizing value for remaining stakeholders and managing litigation and regulatory exposure. The first day declaration reported approximately $163.1 million in cash and cash equivalents, remaining technology assets related to a blockchain-based payment network, and potential claims against third parties. The confirmed plan later established a liquidation trust with a distribution waterfall that prioritizes preferred stockholders over the reorganized debtor, while common stock was reinstated for continued existence under a settlement framework in the disclosure statement and confirmation order.
| Debtor(s) | Silvergate Capital Corporation, Silvergate Liquidation Corporation, and Spring Valley Lots, LLC — Voluntary Petition |
| Court | U.S. Bankruptcy Court, District of Delaware |
| Case Number | 24-12158 |
| Judge | Hon. Karen B. Owens — Confirmation Order |
| Petition Date | September 17, 2024 — Voluntary Petition |
| Confirmation Date | November 13, 2025 — Confirmation Order |
| Cash and Cash Equivalents | Approximately $163.1 million — First Day Declaration |
| Funded Debt (as of Petition Date) | Approximately $18.3 million principal plus accrued interest — First Day Declaration |
| Preferred Liquidation Preference | $1,000 per share, $200 million total — Disclosure Statement |
| Claims Agent | Stretto, Inc. |
Restructuring Overview
The Silvergate cases were filed after the bank's regulatory liquidation process had largely run its course. The first day declaration states that Silvergate Bank stopped accepting deposits in March 2023, entered voluntary liquidation, and later relinquished its banking charter in July 2024. The chapter 11 filings therefore did not seek to preserve an operating bank. Instead, the cases aimed to marshal remaining assets, resolve regulatory obligations, and establish a plan-driven framework for distributions and litigation recoveries described in the first day declaration and disclosure statement.
The plan confirms that structure. The disclosure statement describes the creation of a liquidation trust to liquidate remaining assets and pursue claims, including litigation connected to FTX and other third parties. The confirmation order approved the plan, including releases and exculpation provisions in Article IX, and made the plan effective upon satisfaction of effective date conditions. Those mechanics indicate a wind-down in which value flows through a trust vehicle rather than ongoing operations.
Media coverage characterized the filing as the endpoint of a prolonged wind-down. Cointelegraph described the case as coming after an 18-month wind-down following Silvergate's decision to shut down operations, and Banking Dive reported that the company cited supervisory pressure as a driver of the decision. Law360 framed the filing as a liquidation case with no expected recovery for common stockholders and with anticipated repayment for bondholders. Those external reports align with the disclosure statement's description of a liquidation trust and the reinstatement of common stock for continued existence rather than for a cash distribution.
Company Background and Crypto Banking Pivot
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. For many years, Silvergate Bank operated as a traditional community bank, but it eventually pivoted toward servicing digital asset customers. The bank developed the Silvergate Exchange Network, a platform designed to facilitate 24/7 payments between crypto market participants, and it built a deposit base heavily concentrated among crypto exchanges, trading firms, and digital asset platforms in the first day declaration.
By late 2021, the concentration was significant. Court filings state that crypto firm deposits exceeded 90% of total deposits, leaving the bank exposed to a single industry's liquidity cycle. That business model provided scale during the 2020-2021 crypto boom but also created a structural vulnerability if the sector experienced a rapid contraction. As the market shifted in 2022, the deposit base proved volatile.
The debtor group in the chapter 11 cases reflects the holding company structure. Silvergate Capital Corporation served as the parent holding company, Silvergate Bank was renamed Silvergate Liquidation Corporation after entering voluntary liquidation, and Spring Valley Lots, LLC functioned as a real estate subsidiary, all as described in the voluntary petition and first day declaration. The chapter 11 filing therefore addressed residual assets and liabilities at the holding company level after the bank had already been placed into liquidation by regulators.
External coverage emphasized Silvergate's identity as a crypto-focused institution. Cointelegraph characterized the company as a crypto-friendly bank and reported that the bankruptcy filing came after an extended wind-down. CryptoSlate similarly described the filing as the end of an 18-month wind-down tied to the crypto market collapse and client withdrawals. Those reports align with the chronology described in the first day declaration and with the bank's concentration in digital asset customers.
Deposit Run and the 2022 Crypto Collapse
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. The change represented a decline of more than $8 billion within a single quarter, reflecting rapid withdrawals by digital asset customers after multiple industry failures.
The mid-2022 failures of Three Arrows Capital, Voyager, and Celsius, followed by the November 2022 collapse of FTX, contributed to the loss of confidence that drove outflows, according to the first day declaration. Those events occurred in a market environment that was already deteriorating as risk appetite fell and regulatory scrutiny increased. CryptoSlate reported that client withdrawals exceeded $8 billion after FTX's collapse, echoing the withdrawal figures disclosed in court filings.
The withdrawal shock forced the bank to sell securities to meet liquidity needs. The first day declaration states that rising interest rates contributed to losses on securities sales, resulting in a 2022 net loss of approximately $948.7 million. The combined effect of deposit outflows and realized losses left the bank with limited options to stabilize operations, which ultimately led to the decision to stop accepting deposits in March 2023.
Law360 framed the bankruptcy as part of a broader attempt to conclude the fallout from the crypto collapse, noting that the case came two years after the industry's downturn and that the company sought a final chapter through a liquidation plan. That framing is consistent with the case posture, which focuses on liquidating remaining assets and distributing value through a trust rather than restoring banking operations.
Regulatory Actions and Liquidation Timeline
Regulatory actions played a central role in 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 the submission of a liquidation plan, and the plan was approved on October 2, 2023. Those steps effectively formalized the bank's liquidation path under regulatory supervision.
The declaration also reports that the bank stopped accepting deposits in March 2023 and entered voluntary liquidation, a step the company publicly announced in March 2023 as it chose to shut down operations and liquidate, and that Silvergate Bank was renamed Silvergate Liquidation Corporation on July 5, 2024 before relinquishing its charter on July 8, 2024. By the time of the September 2024 chapter 11 filing, the bank had already ceased operations as a regulated institution, and the bankruptcy addressed residual assets, claims, and litigation rather than operating liabilities.
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, a narrative also reflected in external coverage. Banking Dive reported that supervisory pressure contributed to the bankruptcy filing, highlighting the regulatory dimension of the wind-down supervisory pressure.
The combination of regulatory settlements and liquidation directives left the holding company with limited strategic alternatives. The chapter 11 case thus focused on formalizing the distribution of remaining cash and assets while providing a legal framework for releases and a liquidation trust to pursue claims that could benefit stakeholders, as described in the disclosure statement.
Interest Rate Exposure and Securities Losses
The deposit run forced the bank to raise liquidity by selling securities in an unfavorable interest rate environment. The first day declaration states that rising interest rates amplified the losses associated with those sales, resulting in a net loss of approximately $948.7 million for 2022. That figure provides a direct measure of how quickly liquidity pressures turned into balance sheet losses once deposit outflows accelerated.
The deposit decline and loss profile can be summarized as follows.
| Metric | Amount | Source |
|---|---|---|
| Non-interest-bearing deposits (Sep. 30, 2022) | Approximately $12.005 billion | First Day Declaration |
| Non-interest-bearing deposits (Dec. 31, 2022) | Approximately $3.852 billion | First Day Declaration |
| Deposit decline | More than $8 billion in one quarter | First Day Declaration |
| 2022 net loss | Approximately $948.7 million | First Day Declaration |
The resulting losses contributed to the decision to stop accepting deposits in March 2023 and to enter a regulatory liquidation process. CryptoSlate reported that the bank's 18-month wind-down followed the withdrawal wave after FTX's collapse, highlighting the link between sector-wide confidence shocks and the bank's liquidity profile. Law360 also framed the bankruptcy as a response to the crypto collapse, describing the case as a coda to the sector's 2022 turmoil.
Regulatory Settlements and Supervisory Pressure
Regulatory pressure remained a central theme in the wind-down. Banking Dive reported that supervisory pressure was cited as a driver of the bankruptcy filing, underscoring the role of regulators in shaping the final outcome supervisory pressure. The first day declaration provides the settlement figures, reporting a $43 million payment to the Federal Reserve, a $20 million payment to the California DFPI, and a $50 million payment to the SEC, with the SEC penalty fully offset by the other two settlements.
Those settlement amounts indicate that regulatory issues remained financially material even after the bank's voluntary liquidation. In the context of a holding company wind-down, the settlement payments reduced the cash pool available for distribution and added to the rationale for using chapter 11 to coordinate the remaining claims and distributions. FinanceFeeds reported about $163 million in cash to be divided among stakeholders, which aligns with the cash figures reported in the declaration.
Industry Context and Concentration Risk
Silvergate's concentration in digital asset customers magnified the impact of the 2022 crypto downturn. Court filings indicate that crypto-related deposits exceeded 90% of total deposits by late 2021, highlighting a business model highly sensitive to a single industry's liquidity cycle. When that cycle reversed, the bank's funding base contracted rapidly, forcing asset sales at losses.
The sequence of crypto industry failures provides the broader context. The first day declaration identifies the failures of Three Arrows Capital, Voyager, and Celsius in mid-2022 and the FTX collapse in November 2022 as key events that eroded confidence and triggered deposit outflows. External coverage echoed that context: CryptoSlate described the withdrawal wave after FTX, while Cointelegraph highlighted the 18-month wind-down preceding the bankruptcy.
In a traditional bank, a diversified deposit base and access to stable funding can mitigate such shocks. Silvergate's deposit concentration meant that confidence events in the crypto sector translated quickly into liquidity stress. The bank's rapid pivot from growth to liquidation underscores how sector concentration can drive bank holding companies into wind-down strategies when liquidity options narrow.
Litigation Assets and Diem Technology
The plan materials emphasize that residual value depends in part on litigation recoveries and the liquidation of remaining technology assets. The disclosure statement notes that the liquidation trust is intended to pursue claims against third parties, including claims related to FTX, and to liquidate remaining assets for the benefit of stakeholders. Those claims are by definition uncertain, but they provide a potential source of recoveries beyond the cash and cash equivalents already on hand.
The first day declaration also describes intellectual property and technology assets related to a blockchain-based payment network acquired from the Diem Group in January 2022. The disclosure statement indicates that the reorganized debtor retains those Diem-related assets and certain net operating losses, subject to the plan's opt-out condition. In effect, the plan preserves a corporate shell with residual technology assets and tax attributes, while the liquidation trust handles distributions from cash and litigation recoveries.
These elements illustrate why the plan distinguishes between liquidation trust distributions and the reorganized debtor's residual value. Preferred stockholders receive first-priority liquidation trust interests, while the reorganized debtor retains assets that may benefit common stockholders over time, but external reporting suggested that no near-term cash recovery was expected for common stockholders.
Capital Structure and Remaining Asset Base
The first day declaration provides a snapshot of the estate's remaining assets and funded debt. As of the declaration date, the debtors reported approximately $163.1 million in cash and cash equivalents, 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 noted potential claims and causes of action against third parties, which could generate recoveries for the liquidation trust but were described as having uncertain value.
The disclosure statement identifies the liquidation trust as the primary vehicle to monetize those remaining assets and claims. In addition to the Diem-related intellectual property and potential litigation recoveries, the plan anticipated proceeds from claims tied to FTX and other third-party litigation. The trust structure is designed to convert those residual assets into distributions, with preferred stockholders receiving the first priority in liquidation trust beneficial interests.
The funded debt profile was relatively modest compared to the scale of the deposit base during the bank's peak. The first day declaration reported approximately $18.3 million of funded debt as of the petition date, consisting of subordinated debentures issued in 2001 and 2005, along with accrued interest. That small funded debt stack explains why external coverage anticipated full repayment for bondholders in the liquidation plan. Law360 reported that the company expected to repay bondholders and provide some distributions to preferred equity holders while common stockholders were not expected to receive recoveries.
A high-level summary of the estate's reported assets and obligations is below.
| Category | Amount or description |
|---|---|
| Cash and cash equivalents | Approximately $163.1 million — First Day Declaration |
| Funded debt | Approximately $18.3 million (2001 and 2005 debentures) — First Day Declaration |
| Preferred stock liquidation preference | $1,000 per share, $200 million total — Disclosure Statement |
| Key non-cash assets | Diem-related intellectual property and technology assets — First Day Declaration |
| Potential recoveries | Claims against third parties, including FTX-related claims — Disclosure Statement |
This profile underscores that the case is not driven by large secured debt, but by the distribution of remaining cash and the realization of value from residual assets and litigation claims. The liquidation trust structure therefore plays an outsized role in determining recoveries for equity holders and other stakeholders.
Plan Structure, Liquidation Trust, and Class Treatment
The first amended disclosure statement describes a plan that establishes a liquidation trust to hold remaining assets and pursue claims on behalf of stakeholders. The trust issues beneficial interests in two priorities: first to preferred stockholders, and second to the reorganized debtor, which retains certain assets and tax attributes. The reorganized debtor retains Diem-related assets and net operating losses, subject to an opt-out condition described in the plan materials.
The plan also establishes a data retention and production reserve to fund obligations related to record retention and production, reflecting the continuing regulatory and litigation requirements associated with a bank liquidation. These administrative reserves are a common feature in financial institution wind-downs where regulatory examinations and litigation continue after operations cease.
The confirmation order entered on November 13, 2025 approved the plan, including releases, exculpation, and injunctions in Article IX. It also reflects that Classes 5 and 8 voted to accept the plan while Class 10 was deemed to reject. Those voting outcomes are significant because Classes 5 and 8 include indemnified individuals and preferred stockholders, respectively, whose acceptance supports the liquidation trust structure and release framework.
A summary of class treatment from the disclosure statement is set out below.
| Class | Description | Status | Treatment summary |
|---|---|---|---|
| Class 1 | Other Priority Claims | Unimpaired | Deemed accept — Disclosure Statement |
| Class 2 | Secured Claims | Unimpaired | Deemed accept — Disclosure Statement |
| Class 3 | General Unsecured Claims | Unimpaired | Deemed accept — Disclosure Statement |
| Class 4 | Subordinated Notes Claims | Unimpaired | Deemed accept — Disclosure Statement |
| Class 5 | Indemnified Individuals Claims | Impaired | Voting class; accepted — Disclosure Statement |
| Class 6 | Intercompany Claims | Mixed | Deemed accept or reject — Disclosure Statement |
| Class 7 | Intercompany Interests | Mixed | Deemed accept or reject — Disclosure Statement |
| Class 8 | Preferred Stock Interests | Impaired | Voting class; accepted — Disclosure Statement |
| Class 9 | Common Stock Interests | Unimpaired | Reinstated under settlement — Disclosure Statement |
| Class 10 | Section 510(b) Claims | Impaired | Deemed reject — Disclosure Statement |
| Class 11 | Bhatia Litigation Class Claims | Unimpaired | Deemed accept — Disclosure Statement |
The subordinated debentures represent the main funded debt instruments in the case. The first day declaration states that, as of the petition date, the debtors had approximately $18.3 million of funded debt including about $14.79 million in 2001 subordinated debentures and about $3.49 million in 2005 subordinated debentures, each with accrued and unpaid interest included in those figures. Those debenture claims are placed in the subordinated notes class, which the disclosure statement treats as unimpaired and deemed to accept the plan. That treatment is consistent with external reporting that bondholders were expected to be repaid in full under the liquidation plan.
The plan also established a data retention and production reserve to fund ongoing obligations related to record preservation, regulatory responses, and litigation discovery. In financial institution wind-downs, record retention can be a long-lived obligation, particularly when regulatory investigations or private litigation remain active. The reserve isolates funding for those obligations so that the liquidation trust can make distributions without underfunding compliance requirements.
Preferred stockholders receive the first priority liquidation trust interests and are expected to participate in the preferred stock initial distributable amount, but the disclosure statement states that distributions are not expected to satisfy the full $200 million liquidation preference. Common stock is reinstated for continued existence under a common stock settlement, but external reporting indicated that no cash recoveries were expected for common stockholders.
The plan structure therefore creates a waterfall in which preferred equity receives priority in the liquidation trust, bondholders are expected to be paid in full, and common stockholders retain a reorganized corporate shell and potential residual interest but no immediate cash distribution. Law360 reported that the Delaware bankruptcy judge approved the plan with all objections resolved, reinforcing that the liquidation trust and release framework were central to the outcome.
Key Timeline
| Date | Event |
|---|---|
| 1986 | Silvergate Capital Corporation formed in Maryland — First Day Declaration |
| Late 2021 | Crypto firm deposits exceeded 90% of total deposits — First Day Declaration |
| Mid-2022 | Three Arrows Capital, Voyager, and Celsius failures — First Day Declaration |
| September 30, 2022 | Non-interest-bearing deposits about $12.005 billion — First Day Declaration |
| November 2022 | FTX collapse triggers deposit run — First Day Declaration |
| December 31, 2022 | Non-interest-bearing deposits about $3.852 billion — First Day Declaration |
| 2022 | Net loss of about $948.7 million from securities sales — First Day Declaration |
| March 2023 | Silvergate Bank stops accepting deposits — First Day Declaration |
| May 23, 2023 | Cease-and-desist order required liquidation plan — First Day Declaration |
| October 2, 2023 | Liquidation plan approved by regulators — First Day Declaration |
| July 5, 2024 | Bank renamed Silvergate Liquidation Corporation — First Day Declaration |
| July 8, 2024 | Bank relinquished its charter — First Day Declaration |
| July 2024 | Regulatory settlements with Fed, DFPI, and SEC — First Day Declaration |
| September 17, 2024 | chapter 11 petitions filed |
| September 5, 2025 | First amended plan and disclosure statement filed — Disclosure Statement |
| November 13, 2025 | Confirmation order entered — Confirmation Order |
The timeline shows that the chapter 11 case followed a lengthy regulatory wind-down rather than initiating it. By the time of the petition date, the bank had already surrendered its charter, and the case focused on liquidation trust formation and stakeholder distributions rather than operating restructuring.
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 collapse, 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 assets remained at filing?
The debtors reported approximately $163.1 million in cash and cash equivalents and retained intellectual property and technology assets related to a blockchain-based payment network acquired from the Diem Group, as stated in the first day declaration.
What is the liquidation trust and who receives value first?
The plan created a liquidation trust to liquidate remaining assets and pursue claims, with beneficial interests issued first to preferred stockholders and second to the reorganized debtor, as described in the disclosure statement.
What happens to preferred stockholders?
Preferred stockholders receive first-priority liquidation trust interests, but the disclosure statement notes that distributions are not expected to satisfy the full $200 million liquidation preference.
What happens to common stockholders?
Common stock is reinstated for the continued existence of the reorganized debtor under a settlement, but external reporting indicated that no cash recoveries were expected for common stockholders.
What did regulators require before the bankruptcy?
Regulators issued a cease-and-desist order on May 23, 2023 requiring a liquidation plan, which was approved on October 2, 2023, as stated in the first day declaration.
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. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.
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