Crypto-friendly Silvergate Bank, a troubled U.S. bank that served many crypto giants is closing its doors and placing itself in “voluntary liquidation.”
In the face of turmoil in the digital currency markets, Silvergate announced Wednesday that a “voluntary liquidation of the bank is the best course of action.” The disclosure sent its stock down more than 30 percent in after-hours trading to $3 a share.
Silvergate, a $1 billion loss in Q4 2022
Founded in 1988 in San Diego, Silvergate Bank has opened its doors to cryptocurrency companies over the past five years. In recent years, Silvergate has attracted up to $14 billion in customer deposits and reached a stock price of more than $200 in late 2021.
However, the bank said in the fall that it had “less than 10 percent” of its $11.9 billion in customer deposits on FTX and “less than $20 million” of exposure to BlockFi, another failed platform. It still claimed to have “ample liquidity” in December.
Earlier this year, however, Silvergate Bank slashed its workforce and put its projects on hold, announcing at the same time a $1 billion loss in Q4 2022.
Earlier this month, the California-based financial institution saw its crypto clientele drift away after delaying the filing of its annual report and saying it was reviewing whether it was able to continue operations.
Finally, this week, it cut Silvergate Exchange Network (SEN), its dedicated payment network for its crypto customers. Sources further reported that the bank was looking for a lifeline from the authorities.
Following the announcement, several figures in the ecosystem, including Binance and Coinbase, once again assured that they have no exposure to the publicly traded financial institution.
We are sorry to see Silvergate make the difficult decision to cease operations. A partner and contributors to the growth of the crypto economy, Coinbase tweeted, claiming to have no client funds or business within the bank.