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08/20/2024

Executives at Crypto-Friendly Evolve Bank Depart Amid Regulatory Crackdown: Report

Three executives at Evolve Bank & Trust have left the crypto-friendly bank following a series of incidents, including a cybersecurity breach in May and a regulatory enforcement action in June, according to a report by Jason Mikula of FintechBusinessWeekly.com. According to Mikula, the bank's chief credit officer, corporate controller, and open banking director all departed their positions. Cointelegraph confirmed the information through the executives' LinkedIn accounts and Evolve's public job listing

Executives at Crypto-Friendly Evolve Bank Depart Amid Regulatory Crackdown: Report

Three executives at Evolve Bank & Trust have left the crypto-friendly bank following a series of incidents, including a cybersecurity breach in May and a regulatory enforcement action in June, according to a report by Jason Mikula of FintechBusinessWeekly.com.

According to Mikula, the bank's chief credit officer, corporate controller, and open banking director all departed their positions. Cointelegraph confirmed the information through the executives' LinkedIn accounts and Evolve's public job listings. Evolve Bank did not immediately respond to a request for comment.

The departures are part of a string of challenges facing the financial institution, which provides back-end banking services to a number of crypto-friendly fintech companies.

Evolve's partners include Mercury — which provides banking services for startups, including Web3 companies — and Stripe, a payment processing and crypto connectivity platform, according to Evolve's website.

Evolve Bank & Trust serves multiple crypto-focused fintechs. Source: Evolve

Related: Tokenized Real-World Assets Are 'a $30 Trillion Opportunity' — Polygon CEO

On August 6, Evolve announced that it had fallen victim to "a ransomware attack by the criminal organization, LockBit," which accessed and downloaded "customer information from our databases and a file share during periods in February and May."

"We refused to pay the ransom demanded by the attacker," Evolve said. "As a result, they leaked the data they had downloaded."

In June, the Federal Reserve Board (FRB) took enforcement action against the Arkansas-based Evolve "for deficiencies in the bank's anti-money laundering program, risk management, and consumer protection compliance," according to an FRB statement. The FRB is best known for setting U.S. monetary policy but also supervises and regulates U.S. banks.

"Examinations conducted in 2023 found that Evolve had engaged in unsafe and unsound banking practices by failing to have an effective risk management framework for its fintech partnerships," according to the FRB.

"Additionally, Evolve failed to maintain an effective risk management program or sufficient controls to comply with anti-money laundering laws and consumer protection laws."

As part of the enforcement action, Evolve was required to "strengthen its risk management practices to address potential risks, including compliance and fraud risks," the FRB said.