Silvergate To Close Bank, Wind Down Operations
Per several reports, crypto-friendly bank Silvergate will liquidate the financial institution and reduce its operations. The bank faced issues following the collapse of one of its major partners, crypto exchange FTX.
Today’s announcement seems like an unavoidable step after weeks of speculations and concerns from investors about Silvergate’s capacity to continue operating. As Bitcoinist reported, the bank’s shares suffered from a massive downtrend as the company reported a decline in liquidity and delayed its annual report.
Another Blow For The Industry, Silvergate Closes Its Doors
According to a Bloomberg report, Silvergate confirmed it would wind down operations due to recent events. The company issued the following statement:
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 crypto-friendly bank is committed to repaying all deposits to its customers. The company hired Centerview Partners as its financial advisor and Swaine & Moore, which will provide legal services.
The company added:
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.
As the news about the crypto friendly bank liquidation broke, its shares suffered from critical losses. The company, trading under the ticker SI, was exchanging hands at around $5 as of this writing.
BlackRock, MicroStrategy, and other big companies in the legacy financial industry supported the company. Its liquidation could have unintended consequences for the nascent industry as confidence in the sector continues to wobble.
The FTX collapse has been translated into regulatory scrutiny from regulators, the bankruptcy of several companies, and reputational damage to the nascent asset class. In the long run, this FTX effect could continue to ripple across the crypto sector.