Silvergate announced the curtailment of activities
2023.03.09 02:52
Silvergate announced the curtailment of activities
By Ray Johnson
Budrigannews.com – After being financially battered by the turmoil in digital assets, the crypto-focused lender Silvergate announced that it would be ceasing operations and liquidating the bank.
In a statement released on Wednesday, Silvergate stated, “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.”
It stated that the bank’s strategy calls for “full repayment of all deposits.”
The debacle at Silvergate is a rare instance of crypto’s volatility entering mainstream banking. The bank positioned itself as an entry point into the digital asset market and is a conventional, federally insured lender.
According to Dave Weisberger, the chief executive officer of CoinRoutes, an algorithmic-trading platform, there appears to be little risk that Silvergate’s turmoil will spread to other banks at this point.
“The issues that confronted Silvergate were essentially a consequence of not exactly sufficient gamble the board, outstandingly one of depending a lot on unstable transient stores while loaning or contributing at a more drawn out span,” Weisberger said. ” This is not like FTX’s collapse, where investors lost their deposits; rather, it is a well-organized breakup.
Still, Silvergate’s demise is the most recent in a long line of failures by well-known crypto-related businesses that have stoked demand for more regulation of digital assets.
Shortly after Silvergate’s announcement, Senator Elizabeth Warren, a vocal opponent of cryptocurrencies, posted a response on Twitter.
She wrote, “As the crypto bank of choice, Silvergate Bank’s failure is disappointing but predictable.” Customers need to be made whole right now, and regulators should take action against crypto risk.
The decline of Silvergate’s stock from its peak in November 2021 is 97 percent, which is the same as the decline of the crypto market as a whole. The crypto industry is reeling from a slew of scandals and bankruptcies in 2022, including the stunning collapse of Sam Bankman-Fried’s business empire in November.
Once esteemed at $3 trillion, the whole market is currently worth about $1 trillion.
The announcement on Wednesday comes a week after Silvergate warned that it may cease operations by delaying its annual filing with the Securities and Exchange Commission. Coinbase and Paxos, the bank’s biggest crypto-industry clients, withdrew their deposits as a result of this news.
Investors were in a state of panic when the lender with its headquarters in La Jolla, California, reported a loss of $1 billion for the fourth quarter.
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