© Reuters
By Geoffrey Smith
Investing.com — Cryptocurrencies and stocks of companies active in the sector were still under pressure at the start of the week, as problems at Silvergate (NYSE:) and a steady stream of negative regulatory news kept the asset class going under pressure.
Cryptocurrency exchanges have lined up in recent days to minimize their dealings with Silvergate, which is facing severe liquidity and solvency issues due to the withdrawal of retail investors from cryptocurrency. Customer demand for fiat currency forced Silvergate to sell its large securities portfolio at a steep loss, wiping out much of its capital.
Silvergate said late Friday that it had discontinued the flagship product that allowed customers to move dollars in and out of its system on a 24/7 basis, effectively cutting off one of its biggest revenue streams. Many cryptocurrency companies, including Paxos, Gemini and Crypto.com, said they would stop allowing payments through the Silvergate Exchange Network (SEN) last week, immediately after the bank warned that ‘She might not be able to continue her activities.
Silvergate had struggled late last year when the FTX implosion caused a massive crypto leak. Since then, US regulators in particular have increased their oversight of the remaining cryptocurrency exchanges, leading to a succession of negative press articles suggesting that many of them will struggle to continue operating in the states. -United.
This weekend, the Wall Street Journal reported that the ties between Binance’s nominally separate US operations were, in fact, deeply intertwined with its offshore operations, exposing it to potentially serious regulatory risk. Company president Patrick Hillmann has previously said he expects to have to pay to settle investigations into Binance’s historic US activity.
New revelations have also been made about the governance of , the world’s largest stablecoin, which serves as a key entry and exit point between fiat currencies and cryptocurrencies.
The WSJ cited documents indicating executives knew about money laundering by related parties during a period of market stress in 2017 as the network fought to retain access to the banking system. Tether responded – as usual – by dismissing the “tired allegations from a long time ago” as “more FUD” (fear, uncertainty and doubt), and called the article “completely inaccurate and misleading. “
By 09:20 ET (14:20 GMT), it was down 0.4% at $22,423, while was down 0.2% at $1,570. Silvergate stock fell 8.6% after SEN’s announcement, leading Wedbush to downgrade this highly speculative stock to sell it again, based on a liquidation value of $5 per share and an assumption that only 80% of its value will be recovered upon liquidation.
Shares of MicroStrategy (NASDAQ:), which has a loan repayable to Silvergate in 2025, were largely unaffected.