On Wednesday, Silvergate Capital, which offered financing services to numerous companies in the cryptocurrency sector, announced that it would shut down operations and liquidate its bank unit.
Quick facts
- In a news release, Silvergate stated that it thought a voluntary liquidation of the Bank and an orderly closing down of its operations would be the most prudent decision in light of current regulatory and industry developments. It stated that it would repay all deposits.
- Silvergate’s NYSE-listed stock has dropped more than 43% in after-hours trading to US$2.76. According to Yahoo Finance, the stock has tumbled 87% from its US$21.95 price at the beginning of the year as a result of the company’s loss warnings and concerns about its capacity to stay solvent.
- Even though the bank had previously expressed concern about the possibility of insolvency, most cryptocurrencies dropped due to the news; Bitcoin lost 2.34% and fell below the US$22,000 support level. In the 24 hours leading up to 9:00 a.m. on Thursday in Hong Kong, Ethereum decreased by 2% to US$1,535. The highest decrease, from US$18.49 to $8.86%, was in Solana.
- Due to commercial and regulatory issues, the bank’s holding company, Silvergate Capital, this week informed the U.S. Securities and Exchange Commission that it would need to postpone publishing its 10-K financial report and that it was assessing “its ability to continue as a going concern.”
- Following that, a number of cryptocurrency exchanges and trading platforms, including Crypto.com, Coinbase, and Galaxy Digital, said they were breaking their business ties with the bank.
- The Silvergate Exchange Network, a program that lets institutional and crypto clients exchange 24/7, was shut down by Silvergate Bank last Friday.
- Due to a “crisis of confidence” in the cryptocurrency industry brought on by a series of significant bankruptcies, Silvergate Capital reported a US$1 billion loss for Q4, 2022. The bank also had Sam Bankman-defunct Fried’s FTX exchange as a client.
Also Read:
Crypto Market Distances Itself From Silvergate, Will It Follow In FTX’s Footsteps?