Key takeaways:
According to Silvergate Capital, it will cease activities and liquidate its cryptocurrency bank.
The shut down and liquidation strategy of the Bank provides for the complete recovery of all deposits.
Given the latest shifts in market conditions and regulations, the business asserted that the bank’s voluntary liquidation is its best course of action.
The significant cryptocurrency player Silvergate Bank intends to wind down activities and liquidate its holding firm.
As per the official statement, Silvergate suggests that the best course of action is a “voluntary liquidation” of the Bank and an organized winding down of its activities in conjunction with current regulatory and industry advancements.
Along with New York-based Signature Bank, Silvergate has acted as one of the two primary banks for cryptocurrency businesses.
Compared to Signature’s $114 billion in assets, Silvergate has just over $11 billion in assets. FTX, a defunct cryptocurrency exchange, was a significant Silvergate client.
Following an investigation into Silvergate’s purported participation in the collapse of FTX, numerous cryptocurrency companies, including Coinbase, Paxos, Gemini, BitStamp, Circle and Galaxy Digital, declared in March they would sever ties with the bank. The bank announced that its exchange network would be shut down on March 3, citing a “risk-based choice” as the reason.
The Company is also thinking about the best ways to settle disputes and protect the remaining worth of its assets, such as its confidential technology and tax assetAll deposits will be fully repaid, according to Silvergate, subsequently adding that all other deposit-related services will continue to be offered as the business undertakes the task of shutting down operations. Any additional alterations will be communicated to customers.
Silvergate has been having difficulties for a while. The company reported a nearly $1 billion net loss in the fourth quarter after a rush for the exits at the previous year’s close that saw customer deposits plunge 68% to $3.8 billion, in relation to furloughing 40% of its workforce in January. Silvergate had to sell debt securities worth $5.2 billion to pay the withdrawals.
Although Silvergate never had the chance to grow more than a relatively niche bank, its collapse had a significant impact on the cryptocurrency market. The bank had established the Silvergate Exchange Network, allowing its own customers to send money to each other in almost real time, around-the-clock, without using any other intermediaries. At one point, most of the big digital asset firms had accounts there.
