Several months later, the FTX scandal is still creating a stir in the cryptosphere. Silvergate, one of the main banks to bet on cryptocurrencies with Signature Bank, has announced that it wants to begin its liquidation process. All deposits will be refunded, although the Silvergate Exchange Network (SEN), which allowed customers to make money transfers, was shut down a few days ago.
Silvergate was originally a local California bank specializing in home loans. Fascinated by cryptocurrencies, his boss Alan Lane had decided in 2013 to position his establishment in this segment of activity. At the time, it was difficult for crypto start-ups to borrow from traditional banks. This shift has thus made it possible to attract players such as Coinbose, Crypto.com, Circle and Gemini.
$1 billion in losses in the last quarter of 2022
Silvergate’s situation deteriorated badly last year with an accumulation of headwinds. After the crash of the stablecoin Terra in the spring of 2022, the recent collapse of the FTX platform brought the blow. The fall of Sam Bankman-Fried’s empire precipitated the bankruptcy of the bank, in which the boss of FTX had deposited the equivalent of 1 billion dollars.
The Californian establishment had a nightmarish last quarter of 2022, with deposits collapsing by 52%, from $13.2 billion to $6.3 billion for a net loss of nearly $1 billion.
Signature Bank also in danger?
Several crypto platforms have not survived the cascade of scandals, but Silvergate is the first so-called traditional bank to flinch. However, it is not the largest in the sector, as it holds just over $11 billion in assets, compared to more than $114 billion at Signature Bank, another favorite bank in the cryptosphere.
She therefore finds herself in the spotlight as she faces an investigation into the FTX scandal. Signature Bank coming to follow the same destiny as Silvergate, the shock wave on the cryptocurrency market would be much stronger and would weaken a sector which is trying to recover from a catastrophic 2022.