How crypto-friendly Cross River Bank’s curious rise attracted regulatory heat

Crypto-friendly Cross River Bank has recently landed in the crosshairs of the US Federal Deposit Insurance Corporation (FDIC) over alleged violations of fair-lending laws, documents revealed on Friday.

The bank signed a consent order in early March and claims to have made significant progress on rehabilitating its practices to satisfy the considerable terms. The FDIC issued a public notice of the misconduct on Friday — it should be noted that by reaching an agreement, Cross River Bank neither confirms or denies the allegations made.

The bank’s clients include various digital asset companies. USDC issuer Circle recently switched from Silicon Valley Bank (SVB) after its collapse, over to the New Jersey-based bank for USDC issuance and redemption services.

However, the bank’s considerable rise has piqued the interest of skeptics. Just three years ago, Cross River Bank was operating out of one branch in New Jersey — the bank somehow became the fourth-largest originator of COVID-19 relief loans in the US, and the primary bank for the world’s second-largest stablecoin.

Read more: How the FDIC works and why crypto marketers should be nervous

A spokesperson for Cross River indicated that this year’s consent agreement arose from a 2021 investigation — long before Silicon Valley Bank (SVB) collapsed. However, CEO Gilles Gade acknowledged that scrutiny of banks has generally increased this year since SVB went out of business.

In light of Cross River’s negative FDIC enforcement action, it’s worth reviewing the causes of the company’s parabolic growth — which include ties to offshore crypto companies with traditional difficulty maintaining fiat banking relationships.

Brief timeline of Cross River Bank

• June 2008: In the wake of the recession, Cross River Bank obtains a bank charter and opens for business in New Jersey.
• 2010: The bank forms a technology partnership and starts offering loans outside of its home base. It cites partnerships with Affirm, Marlette, Rocket Loans, Upgrade, and Upstart.
• October 2015: Cross River Bank announces a $100 million securitization agreement with Marlette Funding.
• December 2018: It receives Grow New Jersey (GNJ) credits from the New Jersey Economic Development Authority.
• March 2019: Cross River Bank uses GNJ credits to hire 250 employees, acquire office space in Fort Lee, New Jersey, and begin construction on the space.
• June 2019: The bank announces its acquisition of Seed’s small business banking platform.
• June 2010: Despite operating just a single branch, Cross River Bank somehow issues 106,000 Paycheck Protection Program (PPP) loans for COVID-19 relief. Its $4.7+ billion in PPP originations included loans involved in the US Justice Department’s prosecutions of PPP fraud.
• July 2020: Jewish Insider publishes a piece on the bank, revealing several lending partners, including Affirm and Stripe.
• April 2021: Cross River Bank opens a 70,000 square-foot office complex in Fort Lee after completing work.
• June 2021: It launches a venture capital arm, opens a branch in Brooklyn, and acquires data analytics company PeerIQ.
• October 2021: Cross River Bank announces a deal with Opy USA to provide infastructure and financial solutions for Opy’s “buy now, pay later” loan services.
• October 2021: It participates in the Series C funding round of Ocrolus, a tech firm providing document automation software.
• November 2021: Small business software provider BetterFin is acquired by the bank.
• December 2021: Fintech firm Astra launches a card-to-card payment system powered by Cross River Bank.
• February 2022: The bank signs deals with PayTile (location-based payments), GreenBox POS (banking-as-a-service software initiative), African American Chamber of Commerce of New Jersey (economic development for underserved communities), and Sunstone Credit (loans to solar power businesses).
• March 2022: Cross River Bank extends a $50 million line of credit to Cherry Technologies, taps Chainalysis for expansion of its digital asset services, and raises $620 million in a funding round.
• April 2022: A partnership with Sardine (risk and payments infrastructure) is announced.
• May 2022: The bank partners with Bridgeton Capital (commercial real estate lending), and co-leads an investment round in Lev (digital commercial real estate company).
• August 2022: A Jewish publication praises Cross River’s employment of Haredim, an Israeli population with work ties to other crypto projects, including Brock Pierce of Tether, Bitfinex, Noble Bank, and EOS fame.
• December 2022: Ibanera selects Cross River Bank for payments capabilities.
• March 8, 2023: Cross River Bank silently reaches a consent agreement with the FDIC, neither confirming or denying allegations of unsafe and unlawful banking practices.
• March 15, 2023: Circle chief exec Jeremy Allaire reveals a partnership with the bank for automated payments.
• March 22, 2023: It announces a partnership with Pay.com to create a payments platform for businesses.
• April 2023: The FDIC makes its consent agreement with Cross River Bank public.

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