US Silvergate Bank is Latest Victim of Crypto Meltdown
Subscribe to our newsletter!
- Silvergate Capital, a traditional bank that lends to cryptocurrency firms, has announced that it will “voluntarily liquidate” its assets and wind down operations due to the recent turmoils in the crypto industry, citing industry and regulatory developments as reasons for its decision.
- The bank’s wind down and liquidation plan includes full repayment of all deposits. It has also reached out to Centerview Partners to be its financial adviser and law firm Cravath, Swaine and Moore LLP and Strategic Risk Associates for “transition management assistance.”
- In January, Silvergate reduced its workforce by 40% to address the effects of the crypto mishaps from the past year, and in February 2022, it bought the intellectual property and other assets of the Meta-backed cryptocurrency Diem Payment Network.
Since 2022, the crypto bear market has been constantly prevailing in the industry; this time, its effects have spilled into the mainstream banking system.
Silvergate Capital, a traditional bank lending to cryptocurrency firms, announced last Wednesday, March 8th, that it will “voluntarily liquidate” its assets and wind down operations to mitigate the recursions of the recent turmoils in the crypto industry.
“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 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,” Silvergate Corp. said in a press release.
In line with this, the bank assured its customers that it will do a “full repayment of all deposits.”
Accordingly, Silvergate also stated that it reached out to Centerview Partners to be its financial adviser and the law firm Cravath, Swaine and Moore LLP and Strategic Risk Associates for “transition management assistance.”
Recently, the bank was under fire after it told the US Securities and Exchange Commission (SEC) that it will delay the filing of its annual 10-K report as it is evaluating its ability to stay in business by “analyzing certain regulatory and other inquiries and investigations that are pending.” Following this, the bank’s stocks fell more than 55% and for the last 30 days it recorded a plunge of -81.07%.
Consequently, the California Department of Financial Protection and Innovation stated that it was monitoring Silvergate’s situation.
“The Department is evaluating compliance with all financial laws, as well as safety and soundness obligations, and is working closely with relevant Federal counterparts,” DFPI Commissioner Clothilde Hewlett said.
On the other hand, vocal crypto critic US Senator Elizabeth Warren commented that “as the bank of choice for crypto, Silvergate Bank’s failure is disappointing, but predictable.
“As the impact of FTX’s collapse continues to ripple outward, today we are seeing what can happen when a bank is overreliant on a risky, volatile sector like cryptocurrencies. I’ve been concerned that when banks get involved with crypto, it spreads risk across the financial system and it will be taxpayers and consumers who pay the price. That’s why I am continuing to work with my colleagues in Congress and financial regulators to establish strong safeguards for our financial system from the risks of crypto,” Senate Banking Committee Chairman Sherrod Brown (D-Ohio) also commented.
Last January, along with other crypto firms, Silvergate also reduced its workforce by 40% —or about 200 employees— to address the effects of the crypto mishaps from the past year. (Read more: Crypto Winter Effect? Here are the Web3 Firms that Recently Had Employee Layoffs)
In February 2022, Silvergate Capital Corporation bought the intellectual property and other assets of the Meta-backed cryptocurrency Diem Payment Network—the failed cryptocurrency project of Meta.
This article is published on BitPinas: US Silvergate Bank is Latest Victim of Crypto Meltdown
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.
