The parent business of Silvergate Bank, Silvergate Capital Corp., said in a late March 8 notice that it will "voluntarily liquidate" the bank's assets and reduce operations.
Previous to 2022, Silvergate Bank was reputed to have been impacted by numerous chain collapses of the US dollar crypto industry, particularly the bankruptcy of FTX. Silvergate Bank was previously known as a bank specializing in providing USD trading services for many leading cryptocurrency exchanges in the US since 2013.
“In light of recent industry and regulatory developments, Silvergate Bank 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.”
The bank has several liquidity issues as well as legal issues as a result of its direct connection to FTX. Since the end of 2022, Silvergate Bank has been under careful scrutiny. A few days ago, the bank notified the SEC that it would not be able to submit its financial statements on time because it would need extra time to reassess its assets and undergo a US government investigation.
The aforementioned information has forced numerous cryptocurrency organizations, including Circle and Coinbase, who are still Silvergate customers, to unilaterally sever their relationships with the bank.
Today, the state's Bureau of Financial Protection and Innovation received notice from Silvergate Bank that it had voluntarily started the liquidation process on Wednesday.
The Corporation in a statement said that it sees a liquidation of the bank and an orderly shutdown of the bank as the best course of action, adding that the plan also calls for a complete reimbursement of all deposits.
The news caused the bank's stock SI to drop to a record low, dropping 5.76% on Wednesday to $4.91, a 71.56% decrease from the previous year.
By attracting clients throughout the cryptocurrency bubble and pushing its crypto assets to the fore with a $2.1 billion valuation in September 2020, Silvergate, formed in 1988, has emerged as a key player in the expanding crypto sector.
Recent polls, however, indicate that it has concealed gaps in the market's weakly regulated corporate management.
Following the FTX exchange's demise, many US financial agencies simultaneously alerted banks about the dangers of offering services to businesses exposed to the cryptocurrency industry.