© Reuters
Investing.com – Silvergate Capital, a cryptocurrency lender, announced on Wednesday that it is ceasing operations and liquidating its bank. The stock plunged more than 36% in trading after the close.
Silvergate has been one of the top two banks for cryptocurrency companies, along with Signature Bank. Silvergate has just over $11 billion in assets, compared to Signature’s over $114 billion. One of Silvergate’s main clients was the failed FTX cryptocurrency exchange.
“In light of recent industry and regulatory developments, Silvergate believes that an orderly winding down of the bank’s operations and voluntary liquidation of the bank is the best course of action.”
All deposits will be fully refunded, according to a liquidation plan communicated on Wednesday. The company did not say how it plans to resolve complaints about its business.
The liquidation comes less than a week after Silvergate ceased operating its payment platform, called Silvergate Exchange Network (SEN), which was considered one of its main offerings. As part of the liquidation announcement, Silvergate clarified that all other deposit-related services will remain operational while the company exits.
Silvergate said last week it would delay filing its 2022 10-K annual report while it determines the “viability” of its business. The company said the postponement was partly due to an impending regulatory crackdown, including an investigation already underway by the Justice Department.
Silvergate also attributed the delay to congressional investigations, as well as investigations by its banking regulators, which include the Federal Reserve and the California Department of Financial Protection and Innovation.
Cryptocurrency companies like Coinbase (NASDAQ:) and Galaxy Digital rushed to cut ties with Silvergate last week after the bank said it wasn’t sure it could stay in business.
Silvergate has been in trouble for months. Along with laying off 40% of its staff in January, the company reported a net loss of nearly $1 billion in the fourth quarter, following a year-end rush to exit. latest, which saw customer deposits drop 68% to $3.8 billion. To cover the withdrawals, Silvergate had to sell $5.2 billion worth of debt securities.
The company approached the Federal Home Loan Bank for an additional $4.3 billion. The loan caught the attention of lawmakers such as Sen. Elizabeth Warren, D-Mass, who said it “further introduces cryptocurrency market risk into the traditional banking system.”