Coinbase ceases cooperation with Silvergate due to bankruptcy fears
2023.03.02 11:13
Coinbase ceases cooperation with Silvergate due to bankruptcy fears
By Tiffany Smith
Budrigannews.com – Coinbase, a cryptocurrency exchange (NASDAQ:) Silvergate Capital (NYSE:) and Global Inc.’s financial ties were severed on Thursday. Corp. asserted that it had little exposure to the lender, whose most recent filing raised doubts about its ability to continue operating.
Coinbase claimed that it had stopped accepting or initiating payments to or from Silvergate and would work with other financial institutions to facilitate cash transfers for customers who had parked funds with the exchange.
In early morning trading, Silvergate shares nearly fell by half to $7.06 following the Coinbase announcement. At $60.12, Coinbase shares were down nearly 7%.
Silvergate is trying to find a way out of the liquidity crisis it was thrust into following FTX’s bankruptcy last year, which caused its customers to withdraw billions of dollars in deposits. The bankruptcy exchange’s decision comes as Silvergate tries to find a way out.
Silvergate postponed its annual report on Wednesday, announcing that it had sold additional debt securities—investments that can include bonds and notes—to repay debts this year and was evaluating the impact on “its ability to continue as a going concern.”
Short sellers have also turned their attention to the bank. According to data provided by analytics firm S3 Partners, the most shorted stock in the United States in terms of percentage of float is Silvergate stock, with an estimated short interest of 22.6 million shares, or 82% of the float.
Silvergate, which was established in 1988 and entered the cryptocurrency market in 2013, is one of the most influential banks in the digital asset sector.
Kraken is one of its most popular customers in addition to Coinbase.
