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
- “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.