Crypto bank Silvergate to close; becomes latest victim of crypto turmoil

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Sil­ver­gate Cap­i­tal, which pro­vid­ed lend­ing ser­vices to scores of busi­ness­es in the cryp­tocur­ren­cy indus­try, said Wednes­day it will cease oper­a­tions and liq­ui­date its bank unit.

See relat­ed arti­cle: Sil­ver­gate teeters as reg­u­la­tors cir­cle and cryp­to firms cut ties

Fast facts

  • “In light of recent indus­try and reg­u­la­to­ry devel­op­ments, Sil­ver­gate believes that an order­ly wind down of Bank oper­a­tions and a vol­un­tary liq­ui­da­tion of the Bank is the best path for­ward,” Sil­ver­gate said in a press release. It said it will repay all deposits.
  • NYSE-list­ed Sil­ver­gate stock fell more than 43% to US$2.76 in after hours trad­ing. The stock has slumped 87% from its US$21.95 price at the start of the year, accord­ing to Yahoo Finance, as it warned of loss­es and doubts about its abil­i­ty to remain solvent.
  • Though the bank had ear­li­er warned of the like­li­hood of insol­ven­cy, most cryp­tocur­ren­cies fell after the announce­ment — Bit­coin lost 2.34% to break below the US$22,000 sup­port line. Ethereum dropped 2% to US$1,535 in the 24 hours to 9:00 a.m. on Thurs­day in Hong Kong. Solana saw the biggest decline of 8.86% to US$18.49.
  • Sil­ver­gate Cap­i­tal, the bank’s hold­ing com­pa­ny, last week noti­fied the U.S. Secu­ri­ties and Exchange Com­mis­sion that it would have to delay fil­ing its 10‑K finan­cial report due to busi­ness and reg­u­la­to­ry chal­lenges, and that it was eval­u­at­ing “its abil­i­ty to con­tin­ue as a going concern.” 
  • Sub­se­quent­ly, a raft of cryp­tocur­ren­cy exchanges and trad­ing plat­forms said they were cut­ting busi­ness ties with the bank, includ­ing Crypto.com, Coin­base and Galaxy Digital.
  • Last Fri­day, Sil­ver­gate Bank sus­pend­ed the Sil­ver­gate Exchange Net­work, a ser­vice that allowed cryp­to and insti­tu­tion­al clients to make trans­ac­tions around the clock.
  • Sil­ver­gate Cap­i­tal had report­ed a US$1 bil­lion loss for Q4, 2022 due to a “cri­sis of con­fi­dence” in the cryp­tocur­ren­cy sec­tor result­ing from sev­er­al major bank­rupt­cies. The bank also had Sam Bankman-Fried’s col­lapsed FTX exchange as a customer.

See relat­ed arti­cle: Bybit sus­pends U.S. dol­lar bank trans­fers, pos­si­ble link to Sil­ver­gate shut­ter­ing cryp­to bank­ing network

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