Crypto bank Silvergate shuts down operations, liquidates after market meltdown
Silvergate Capital, the crypto-focused bank at the center of the crypto industry crisis is finally shutting down its operations and liquidating after the market meltdown. In an announcement on Wednesday, Silvergate Bank said it will “voluntarily liquidate” its assets and wind down operations, its holding company, Silvergate Capital Corp.
In a press release, Silvergate said: “Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI), the holding company for Silvergate Bank (“Bank”), today announced its intent to wind down operations and voluntarily liquidate the Bank in an orderly manner and in accordance with applicable regulatory processes.”
The news of the liquidation comes less than a week after Silvergate discontinued its payments platform known as the Silvergate Exchange Network (SEN).
As part of the announcement, Silvergate also provided clarification that all other deposit-related services remain operational as the company winds down. Customers will be notified should there be any further changes.
“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 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 company said.
Before its demise, Silvergate is a central lender to the crypto industry and has served as one of the two main banks for crypto companies, along with New York-based Signature Bank. Its stock plunged more than 36% in after-hours trading. FTX, the crypto exchange founded by the disgraced San Bankman-Fried, was a major Silvergate customer before the company filed for bankruptcy last year. Silvergate has just over $11 billion in assets while Signature Bank has over $114 billion.
A White House spokesperson referred the media to Press Secretary Karine Jean-Pierre’s remarks that the presidential administration was monitoring the situation from earlier this week. Earlier this week, Karine Jean-Pierre said that President Joe Biden would continue to urge the US Congress to take action on crypto issues and come up with regulations to protect crypto investors.
Founded in 1988 by Derek Eisele, the La Jolla, California-based Silvergate Capital was a publicly-traded bank holding company that provides innovative financial infrastructure solutions and services to clients in the crypto industry.
Silvergate Capital operates through its subsidiary, Silvergate Bank, which is a commercial bank that provides banking services to businesses in the fintech and digital currency industries. The bank offers deposit products, including interest and non-interest-bearing demand deposit accounts and savings accounts, as well as cash management services, such as wire transfer services, online banking, and mobile banking.
One of the key services provided by Silvergate Bank is the Silvergate Exchange Network (SEN), which is a proprietary network that allows institutional investors and digital currency exchanges to transfer U.S. dollars between each other instantly, 24/7. The service later became popular in the digital currency industry due to the speed and reliability of the transfers.
Before the shutdown, Silvergate Capital’s clients include institutional investors, digital currency exchanges, and other businesses in the digital currency industry.