Top US crypto bank Silvergate has gone into liquidation

The cryptocurrency bubble has completely burst and is now knocking over banks.

Silvergate Bank, one of the largest US cryptocurrency banks, has announced that it will enter liquidation.

Holding company Silvergate Capital Corporation said Wednesday, “In light of recent industry and regulatory developments, Silvergate believes an orderly wind-down of banking operations and voluntary liquidation of banks is the best course of action. There is,” he announced.(opens in new tab)“The bank’s wind-down and liquidation plans include the full repayment of all deposits.”

This comes just five days after Silvergate Bank announced it would be discontinuing one of its flagship instant money transfer systems, the Silvergate Exchange Network. The company reassures customers that other deposit-related services will continue to work even as it scales back, but those who do business with Silvergate probably don’t want to rely on that.

California-based Silvergate Bank turned to cryptocurrency in 2013 and eventually became one of the top crypto banks in the United States. However, the higher it climbs, the harder it falls, and for those following the predicament of Silvergate, this article has been hanging on the wall for some time.

Tweet may have been deleted
(opens in new tab)
(opens in new tab)

Cryptocurrency exchanges were one of the bank’s biggest customers, so the dramatic collapse of FTX late last year had a big impact on Silvergate. This resulted in an $8.1 billion bank run.(opens in new tab) At Silvergate, it liquidated $5.2 billion of debt securities to cover withdrawals, resulting in a loss of $718 million. This has significantly exceeded bank profits since 2013.(opens in new tab).

Silvergate also laid off 40% of its workforce in January and its stock price plunged 46%, while deposits fell about 68% in the fourth quarter.(opens in new tab)Read the signs, laundry list(opens in new tab) Major cryptocurrency exchanges like Coinbase and Galaxy Digital end ties with Silvergate(opens in new tab) It may have exacerbated the bank struggles last week.

In November 2021, Silvergate Bank was valued at $222 per share at its peak.(opens in new tab) — A drop of over 98% from its peak.