can I use a prepaid gift card if the issuing bank was killed by the FDIC

Factual Questions
1

2 questions about prepaid credit cards:

A couple months ago, I got a VISA prepaid gift card worth $100. I used it once, then forgot about it…
And now I want to check the remaining balance. The official Visa web site says to check the web site of the bank that issued the card.
So I look at the fine print on the back of the card, which says the card was issued by something called the Silverton Bank. And a google of “Silverton Bank” shows that the bank has failed and is now officially dead.

So—what happens to an honest citizen like me?
Am I as screwed as the people who invested with Bernie Madoff? I ain’t no millionaire—I just wanna use my birthday gift from grandma!!!
And another question, this time about PAYPAL:
Can I use prepaid gift cards to make payments through paypal?
(It didnt work with the card I have right now)

2

Regarding your first question, the FDIC has ruled that stored value cards qualify as bank deposits and as such are covered by FDIC insurance. See FDIC: FIL-129-2008: New General Counsel's Opinion No. 8

The information on the Silverton Bank closure is here: FDIC: Failed Bank Information - Bank Closing Information for Silverton Bank, N.A., Atlanta, GA . From the Question and Answer Guide, #48, “Prepaid cards will continue to have value.”