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Crypto Bank Silvergate Set For Voluntary Liquidation

The firm saw a considerable drop in its share price and will now begin to wind down operations

Photo Credit: Maxim Hopman / Unsplash

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

Earlier this month, Silvergate’s share price dropped by almost 50%, with customers withdrawing due to revelations regarding the company’s exposure to the collapse of crypto exchange FTX. The fall of FTX, one the world’s largest cryptocurrency exchanges, sent shockwaves through the crypto market, with then CEO Sam Bankman-Fried still undergoing trial.

Silvergate states that, “In light of recent industry and regulatory developments, the company believes that an orderly wind-down of Bank operations and a voluntary liquidation of the Bank is the best path forward.” Silvergate claims this wind-down will include full repayment on all deposits and the company is also looking at how best to resolve claims and preserve the residual value of its assets, this includes its proprietary technology and tax assets.

Liquidation

Silvergate had recently announced that it faced inquiries from bank regulators and the Department of Justice. This has resulted in some of its major crypto clients withdrawing from their relationship with the bank, resulting in a fall in the stock price. The collapse of FTX is still sending ripples through the crypto space with investors and crypto holders being more cautious and wanting to distance themselves from anyone allegedly involved with FTX.

US regulators have warned banks of the risks facing crypto, looking to warn banks about engaging with the crypto sector. Regulators state that banks issuing or holding crypto tokens stored on public, decentralised networks are likely to be inconsistent with safe banking practices. Last year also saw an overall increase in hacking numbers for crypto losses.

Silvergate will also discount the Silvergate Exchange Network, which it only announced earlier this month. The company states that deposit-related services remain operational as the company works through the wind-down process and customers will be notified of any further changes.

Written By

Paige Cook is a writer with a multi-media background. She has experience covering video games and technology and also has freelance experience in video editing, graphic design, and photography. Paige is a massive fan of the movie industry and loves a good TV show, if she is not watching something interesting then she's probably playing video games or buried in a good book. Her latest addiction is virtual photography and currently spends far too much time taking pretty pictures in games rather than actually finishing them.

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