Growing List of Crypto Companies Cutting Silvergate Ties
Companies throughout the digital assets industry distanced themselves from Silvergate Thursday after the crypto-friendly bank delayed the filing of its annual 10-K report with the Securities and Exchange Commission (SEC)
In its notice to the SEC filed yesterday, the bank signaled its financial health could be different than previously disclosed, having sustained more losses during its fourth fiscal quarter of last year than it initially reported in January.
In response, Silvergate’s stock price more than halved on Thursday, cratering 53% to $6.35 as of this writing. The decline represented over a 93% decrease from the stock’s all-time high of around $222, set in November 2021 during crypto’s previous bull run.
Cryptocurrency exchange Coinbase Tweeted it would no longer facilitate payments using the La Jolla, California-based bank in U.S. dollars. The decision was made “in light of recent events [and] an abundance of caution,” the exchange explained.
At Coinbase all client funds continue to be safe, accessible & available.
In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
Crypto.com, an exchange based in Singapore, told Decrypt the company would reject funds transferred to and from its platform via Silvergate as well. “Deposits and withdrawals via Silvergate have been temporarily suspended,” a company spokesperson said.
The Luxembourg-based crypto exchange Bitstmap stated it would temporarily pause its support for bank transfers conducted via Silvergate in a blog post, saying its U.S. dollar payments moving forward would be facilitated using Signature Bank, another bank popular among firms within the digital assets industry.
Cryptocurrency exchange Gemini, founded in 2014 by the Winklevoss twins, said it has stopped accepting customer withdrawals and deposits or fulfilling wire transfers via Silvergate on its platform.
Circle, the company that owns and issues the stablecoin USDC, stated it was also backing away from Silvergate. On Twitter, Circle disclosed it was currently “in the process of unwinding certain services with [Silvergate] and notifying customers.”
1/ We maintain relationships with several banking partners. We are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers. Otherwise, all Circle services, including USDC are operating as normal.
— Circle (@circle) March 2, 2023
Paxos, another firm involved in issuing stablecoins–digital assets that are pegged to the price of fiat currencies like the U.S. dollar–indicated it had also discontinued transfers to its account with Silvergate, adding it would “continue to process all outgoing payments.”
The CTO of stablecoin Tether stated on Twitter that the firm had no exposure to Silvergate as well.
Cboe Clear Digital disclosed it was “pausing all transactions” with Silvergate bank, according to a notice published by the company Wednesday. Mike Novogratz’s investment firm Galaxy Digital also warned it has stopped accepting or initiating transfers to Silvergate.
1/2 In light of recent developments, Galaxy has stopped accepting or initiating transfers to Silvergate. As a firm, we continue to have no material exposure to Silvergate, and this action was taken out of an abundance of caution.
— Galaxy (@galaxyhq) March 2, 2023
Silvergate previously reported that its bank deposits had fallen significantly amid the collapse of cryptocurrency exchange FTX, reporting a 68% drawdown of $8.1 billion in January that took place during the final fiscal quarter of last year.
In order to satisfy the avalanche of withdrawals it faced during that time, the crypto-friendly bank secured a $4.3 billion loan from the Federal Home Loan Bank and sold around $5.2 billion in debt securities.
The bank drew ire from members of Congress including Elizabeth Warren (D-Mass), who penned an open letter addressed to Silvergate CEO Alan Lane. The lawmakers claimed that Congress and the public deserved insight into the role that Silvergate potentially played in FTX’s implosion.
Last month, the Department of Justice disclosed it was examining the bank’s relationship with the now-bankrupt exchange founded by disgraced crypto mogul Sam Bankman-Fried, who’s been charged with a series of financial crimes in the wake of his exchange’s implosion.
Investors on Wall Street, including the hedge fund of billionaire George Soros, have recently piled on bets against Silvergate, making it one of the most shorted stocks among publicly-traded companies in the U.S. Of all the shares in Silverfgate that are available for trading, 71% are currently being sold short, according to data from MarketWatch.
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Source: Decrypt.co
The post Growing List of Crypto Companies Cutting Silvergate Ties appeared first on Crypto Breaking News.
Filed under: News - @ March 2, 2023 8:22 pm