Explorer

Crypto Lender Silvergate Collapses, Says Will Voluntarily Liquidate Bank

Silvergate, a California-based bank, known for its Crypto-focused lending, on Wednesday said that it is winding down operations and will voluntarily liquidate the Bank

Silvergate, a California-based bank known for its crypto-focussed lending, on Wednesday said that it is winding down operations and will voluntarily liquidate the Bank. According to the company statement, the move has been made "in light of recent industry and regulatory developments.”

Silvergate said, “Silvergate Capital Corporation, the holding company for Silvergate Bank, today announced its intent to wind down operations and voluntarily liquidate the Bank in an orderly manner and in accordance with applicable regulatory processes. 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.”

The company also added that the Bank’s wind-down and liquidation plan includes “full repayment of all deposits.” The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets, the statement said.

After the announcement, the Californian Bank’s stock price dropped by approximately 44 per cent on Wall Street, reported Business Lend. 

Also Read: Silvergate Collapse: Why The Fall Of A Crypto-Friendly Bank Has Led To Market Meltdown

Many of the major cryptocurrency companies resorted to Silvergate’s financing since traditional banks were reluctant to work with them due to regulators' concerns. However, after the US Department of Justice opened an investigation against the bank in relation with the former CEO of collapsed crypto exchange FTX Sam Bankman-Fried, thing started to go southwards.

In its filing document on March 1, the crypto-friendly bank said that it "is currently analysing certain regulatory and other inquiries and investigations that are pending."

After the company announced it will review its accounts books and conduct an audit, multiple clients have already left and the ones who have not left are planning to leave the company as soon as possible. 

In 2013, Silvergate turned into a crypto financial institution. In 2019, the company made its IPO, promising an entire refocus on the business. As of September 30 last year, Silvergate had $11.9 billion in digital property held in custody, reported Business Lend. 

But with the collapse of FTX in November last year, the bank reported $3.8 billion in digital property held in custody as of December 31, the report said. FTX was one of all Silvergate’s big clients. 

Also Read: Crypto PMLA: Exchanges, Intermediaries Directed By Finance Ministry To Perform KYC Of Clients

However, Dave Weisberger, the CEO of CoinRoutes told CNN, “The problems that faced Silvergate were primarily a result of less-than-adequate risk management, notably one of relying too much on volatile short-term deposits while lending or investing at a longer duration…This is not like the collapse of FTX, where investors lost their deposits, but, rather, an orderly dissolution.”

Silvergate’s stock has fallen 97 per cent from its November 2021 high. A string of bankruptcies and scandals in 2022, including FTX collapse, has left the crypto industry reeling. Once valued at $3 trillion, the entire market is now worth about $1 trillion.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.

View More
Advertisement
Advertisement
25°C
New Delhi
Rain: 100mm
Humidity: 97%
Wind: WNW 47km/h
See Today's Weather
powered by
Accu Weather
Advertisement

Top Headlines

India Confirms Meeting Between India, Canada Intel Officials, But Maintains No Evidence Shared On Nijjar Case
India Confirms Meeting Between India, Canada Intel Officials, But Maintains No Evidence Shared On Nijjar Case
Jharkhand Elections: INDIA Bloc Arrives At Seat-Sharing Agreement, Friendly Fight In 3 Seats
Jharkhand Elections: INDIA Bloc Arrives At Seat-Sharing Agreement, Friendly Fight In 3 Seats
Pawar Family Hosts Separate Diwali Events For 1st Time As Ajit, Sharad Gear Up For Maharashtra Polls
Pawar Power Split: Pawar Family Hosts Two Diwalis For 1st Time As Ajit, Sharad Gear Up For Polls
4 Sanitation Workers, Including Two Women, Killed After Being Hit By Train In Kerala's Palakkad
4 Sanitation Workers, Including Two Women, Killed After Being Hit By Train In Kerala's Palakkad
Advertisement
ABP Premium

Videos

Digital Arrest Explained: What is Digital Arrest, and How to Avoid It? Key Points to Keep in MindAniruddhacharya Interview: How Did Baba Aniruddhacharya Gain Knowledge Without Attending School as a Child?Diwali 2024: Akshardham Air Quality Deteriorates to Hazardous Levels Post-October 30Bihar's Air Turns Toxic: Fireworks Lead to Hazardous AQI Across Multiple Districts

Photo Gallery

Embed widget