American bank Cross River, which supports crypto projects, has been instructed by the Federal Deposit Insurance Corporation (FDIC) to stop this type of activity.
The FDIC has initiated enforcement proceedings for “unsafe and unsound” banking practices against cryptocurrency-friendly bank Cross River.
The FDIC reports that Cross River has failed to organize and maintain “effective internal controls, information systems, and sound credit underwriting practices.”
The injunction states that the bank was guided by “unsafe or unreasonable” practices in its operating activities.
Commenting on the FDIC’s order, Cross River Press Service said the bank’s board agreed to strengthen its oversight and control practices and ensure that necessary corrective action is taken.
“It is important to note that the order makes no mention of discriminatory practices or restitution.
It also does not place any special restrictions on our other partnerships or loan products that we currently offer,” said a Cross River spokesperson.
Cross River founder and chairman Gilles Gade acknowledged that since the collapse of Silicon Valley Bank (SVB), his institution has been under constant scrutiny from various regulators.
In his view, the SVB events were a new starting point for increased regulatory scrutiny, with a particular focus on banks supporting the crypto industry.
Earlier, members of the U.S. Congressional Financial Services Committee asked the FDIC, FRSO and OCC for information confirming or denying possible concerted actions to debank cryptocurrency companies.