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Yet another major crypto-related firm is shutting down its services.
Silvergate Capital Corporation, the parent company of crypto bank Silvergate, announced on March 8th that it plans to shut down Silvergate Bank operations and voluntarily liquidate it.
In the press release shared by Silvergate Capital Corporation, the company claimed that Silvergate Bank’s voluntary liquidations come “in light of recent industry and regulatory developments.”
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According to the company, the liquidation will be conducted “in an orderly manner,” following all “applicable regulatory processes.” Silvergate Capital claims that, during voluntary liquidation, it will fully repay all user deposits.
The company is one of the major lenders in the cryptocurrency industry. Its Silvergate Bank is the second largest crypto bank with over $11 billion in assets.
The now-defunct cryptocurrency exchange FTX was a prominent Silvergate customer. The US Department of Justice (DOJ) has launched an investigation regarding the bank’s involvement in the collapse of the crypto exchange.
In response, many cryptocurrency firms that had worked with Silvergate announced that they are set to terminate their partnerships with the firm. The crypto-related companies that cut ties with Silvergate include Coinbase, Gemini, BitStamp, Paxos, and Galaxy Digital.
Part of the company’s statement shared in the press release reads:
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.
A few days before this announcement, Silvergate discontinued its payment platform Silvergate Exchange Network (SEN).
Silvergate has been struggling since late last year. It reported a net loss of about $1 billion in the fourth quarter. The rush for the exit that began by the fall of FTX saw Silvergate’s customer deposit drop by 68%. The company sold $5.2 billion of its debt security to cover withdrawals.
Silvergate also borrowed $4.3 billion from the Federal Home Loan Bank, a move that drew the attention of some US lawmakers such as Sen. Elizabeth Warren.
In January this year, the company laid off 40% of its employees, while in March, its stock price started falling drastically.
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