DFPI, Fed to oversee bank’s self-liquidation
On June 1, the California Department of Financial Protection and Innovation (DFPI) announced that it issued a joint cease-and-desist order with the Federal Reserve Board to fulfill the voluntary liquidation of a crypto-friendly bank. Focusing on providing financial services in the crypto-asset industry, the bank began operating in 2013. In 2023, however, the bank announced its voluntary liquidation, following a mass exodus of high-profile clients. In the fourth quarter of 2022, the bank experienced a sudden drop in deposits, triggered by the collapse of a crypto-exchange company in the previous quarter. DFPI noted that in its most recent examinations of the bank, the bank showed deficits in security and compliance with regulations. Within 10 days of the order, the bank must submit a voluntary self-liquidation plan acceptable to DFPI and upon approval, must implement that plan to wind down its operations “in a safe and sound manner and in compliance with all applicable federal and state laws, rules, and regulations.” The bank has advised that the liquidation will include full repayment of all of its deposits.