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

Crypto bank Silvergate to close; becomes latest victim of crypto turmoil

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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

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, 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.

See related article: Bybit suspends U.S. dollar bank transfers, possible link to Silvergate shuttering crypto banking network

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