The crypto bank Silvergate has ended their digital assets’ payments system due to an “risk-based decision.”
The announcement comes following the bank’s stock dropped over 59% in the past week amid the possibility of bankruptcy.
Silvergate posted on their website March. 4 that it was closing its Silvergate Exchange Network (SEN). The other deposit-related services remain in operation.
SEN lets the bank’s institutional investors as well as digital currency customers access to swap U.S. dollars between their accounts 24 hours a day.
Silvergate also offers an infrastructure platform that supports stablecoins as well as Digital Asset Custody Management as well as collateralized loan services.
The shares of the bank SI, which are listed at the New York Stock Exchange (NYSE) have hit the all-time low on Thursday dropping over 97% since their high in the month of November 2021. On Friday, shares closed in the upward direction of 0.9 percent to $5.75 in normal trade.
United States Judge Michael B. Kaplan ordered BlockFi to return the $9,850,000 it had deposited with BlockFi.
BlockFi as well as Silvergate is one of those companies which will be affected by the fall of FTX in the November of 2022. Following the collapse, Silvergate reported a $1b loss in the last quarter, and also cut the 40% employees.
Federal Prosecutors are investigating the Silvergate’s involvement within the FTX collapse. The probe focuses focused on the hosting of accounts tied to the former FTX CEO Sam Bankman-Fried’s business.
Crypto firms ditch Silvergate amid solvency concerns
On Mar. 1st, the bank declared that it would delay filing its annual financial report, 10-K and many were worried that it was close to filing for bankruptcy.
One day after the announcement, the crypto companies Coinbase, Paxos, Circle, Galaxy Digital, and Bitstamp announced that they were planning to reduce their collaboration with the bank in a certain capacity.
“Coinbase will be facilitating institutional client cash transactions with our other banking partners and have taken proactive action to help ensure that the clients experience no impact from this change,”
said Coinbase
In light of the recent developments We have decided to stop processing transfers via Silvergate.Bank transfers will be offered by our other international banking partners. Bitstamp’s client funds will remain safe and accessible.
Read more: https://t.co/8Re4cXFstD— Bitstamp (@Bitstamp) March 2, 2023
Additionally, MicroStrategy and Tether publicly claimed that they did not have any exposure of any kind with Silvergate Bank.
A 10-K is a report that is required from the Securities and Exchange Commission (SEC) that gives a complete report on a company’s overall business and financial standing.
Silvergate demanded an extension of two weeks to complete its report for the fiscal year.
The bank also disclosed it sold more debt securities in the past year at the cost of a loss. The bank’s losses could increase and it may have “less than well capitalized.”
