Silvergate, the largest cryptocurrency bank in the US, is shutting down after it announced that it is shutting down its operations and liquidating Silvergate Bank, sending its share price plummeting after a months-long downward slide for the troubled crypto lender.
The bank said in a statement that it believes “an orderly winding down of the bank’s operations and voluntary liquidation of the bank is the best way forward”, adding that the plan “includes the full repayment of all deposits”.
It is worth noting that Silvergate is one of the two crypto banking giants. The other is New York-based Signature Bank, which has over $114 billion in assets. Silvergate has just over $11 billion.
The lockout sent the bank’s stock price to a record low.
The announcement sent the bank’s share price to a record low as it fell 5.76% to $4.91 on Wednesday, down 71.56% since the start of the year.
In recent years Silvergate , which was founded in 1988, had grown into the largest cryptocurrency bank in the US, attracting up to $14 billion in customer deposits and reaching a share price of over $200 by the end of 2021.
Last week, the bank also announced it was closing its 24/7 instant payments network, Silvergate Exchange Network, while keeping “all other deposit-related services” operational, and revealed plans in a filing last week to lay off 40% of its workforce, in a move targeting around 200 employees, amid “recent turmoil” and as the “digital asset industry underwent a transformational change”.
Silvergate has long used its ties to FTX as a way to promote its business. FTX and its trading group subsidiary Alameda Research had accounts at Silvergate and customers of the exchange often received instructions to put money in the bank when making deposits.
In recent months, its customers had withdrawn more than $8 billion, forcing it to sell assets, resulting in losses of $718 million from the sale of securities.
In December, a group of senators sent a letter to Silvergate asking the company to explain its ties to FTX.
“As the impact of the FTX collapse has not abated, today we see what can happen when a bank becomes overly dependent on a risky, volatile sector like cryptocurrencies,” said Sherrod Brown, chairman of the Senate Banking Committee, said Wednesday.
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