The popular crypto bank Silvergate has decided to cease operations. The company said that the voluntary liquidation of the bank is the best strategy possible, given changes in the industry and regulation. Silvergate Bank’s liquidation plan provides for “full repayment of all deposits.”
Silvergate employees have been told to prepare for liquidation and closure as soon as possible.
UPDATE: Employees at Silvergate $SI have been told to prepare for liquidation and shutdown imminently.
**Source: “we’ve been told that an orderly liquidation will be announced and our charter will be handed over to the FDIC.”
**employees have been given their WARN Act… https://t.co/2v15gcjMHQ
— Andrew (@AP_Abacus) March 8, 2023
In early March, Silvergate failed to file a Form 10-K with the US Securities and Exchange Commission (SEC) for the previous fiscal year, a critical document to prove financial stability.
In a notice sent to the SEC, the bank made it clear that its financial condition may differ from previously disclosed as it suffered more losses in last year’s fiscal fourth quarter than originally reported in January. Immediately thereafter, Silvergate’s stock price fell by more than 50%.
The Coinbase cryptocurrency exchange was the first to react to this news – it immediately announced that it would stop using the services of the bank.
Singapore-based exchange Crypto.com has also taken the decision to temporarily suspend bank transfers through Silvergate. Crypto exchange Bitstmap followed the example of its colleagues. All exchanges have been chosen as partners for making payments by Signature Bank.
A little later, the issuers of the popular USDC and BUSD stablecoins, Circle and Paxos, got involved. They also hurried to distance themselves from the crypto bank.
Silvergate Bank has held an important place in the digital asset ecosystem and has been the main regulated banking partner for hundreds of crypto companies around the world, and especially in the US. The experts explained that the bank had one weakness: its deposits were not really deposits in the usual sense. They were more like money flows going through a money transfer company like MoneyGram International or Western Union. As soon as the flow of money dried up, the crypto bank stopped earning.
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