Crypto bank Silvergate to close, return all deposits; becomes latest victim of 2022 crypto turmoil

Danny Park

1 year ago

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.

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.