Key Takeaways
Silveragte is facing a probe by the US DOJ over its involvement with the bankrupt FTX exchange and Alameda Research.
Coinbase stated that it had minimal exposure to Silvergate.
Leading cryptocurrency exchange Coinbase has announced that it is ending its partnership with Silvergate Bank. The latest development comes amid Silveragte facing a probe by the United States Department of Justice over its engagement with the bankrupt FTX exchange and Alameda Research.
Reasoning the decision to cut financial tied with Silvergate, Coinbase stated ,”In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate. “
Further in its tweet, Coinbase added that it had minimal exposure to Silvergate. Apart from Coinbase, Paxos has also terminated its partnership with Silvergate citing an ongoing US prosecutors probe on the bank.
“In light of recent developments with Silvergate Bank, Paxos has discontinued all SEN transfers and wires to our Silvergate account. Paxos will continue to process all outgoing payments”, Paxos tweet reads. LedgerX is another firm that is ending its partnership with Silvergate and is now shifting toward Signature Bank instead.
Earlier this week, the crypto-focused bank announced that it would delay filing its annual report, causing its stock price to plunge 10% in after-hours trading as concerns over the banks’ liquidity issues spiked.
Silvergate’s liquidity troubles started following the implosion of FTX in November. The digital asset bank announced a $1 billion net loss in the fourth quarter of 2022, forcing it to make actions to maintain cash liquidity, including selling debt securities and wholesale funding. In February, the bank said it expected to sell around $1.7 billion of additional assets soon to repay a loan from the Federal Home Loan Bank of San Francisco.
The bank and its CEO Alan Lane are also facing a class action lawsuit where they have been accused of “aiding and abetting” a multibillion-dollar fraud scheme orchestrated by Sam Bankman-Fried, FTX, and Alameda Research. Apart from this lawsuit, in January, a class-action suit was filed against Silvergate in the US District Court of Southern California, alleging that the platform failed to detect occurrences of money laundering.
