- Silvergate Capital, a crypto-focused bank that mostly serviced FTX, has announced that it is shutting down and liquidating due to “recent industry and regulatory developments”.
- The bank saw its assets drop to $11 billion and laid off 40% of its employees in January 2023.
- Signature Bank is now reportedly the only main bank for crypto companies, with over $114 billion in assets.
Crypto-focused bank Silvergate Capital announced that it was shutting down its operations and liquidating because ‘recent industry’ developments and regulation.
The bank mostly serviced FTX, which has suffered major loss after its founder Sam Bankman-Fried was caught up in legal issues. According to a CNBC coverage, Silvergate saw its assets drop to just $11 billion despite receiving major investments from Citadel Securities and BlackRock.
It said that as part of its plan, all deposits will be fully paid and it has called on Centerview Partners as financial advisor and Cravath, Swaine & Moore for legal services.
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“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 company said in its statement.
Of course, for those who follow crypto news, the writing was already on the wall after the bank shutdown its payments exchange platform. However, it said that other services relating to deposit was still working until further notice.
Silvergate Capital itself has come under investigation from the Department of Justice in relation to its dealing with FTX as well as the Federal Reserve and the California Department of Financial Protection and Innovation.
It laid off 40% of its employees in January 2023 as it saw deposits drop by 68% and reported a net loss of $1 billion in the last quarter of 2022. The bank lost business from crypto firms like Coinbase and Galaxy Digital when it reported that it may not be able to stay in business for long.
This leaves Signature Bank as the only main bank for crypto companies and it allegedly has over $114 billion in assets. We will see how this developments affect the price of Bitcoin and other cryptos over the weekend.
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