- Silvergate Bank is to be wound down after its parent company filed for liquidation
- Silvergate Capital Corporation made the announcement last night, a week after the bank alarmed investors by failing to file its annual earnings
- The bank was hit very hard by the collapse of FTX and allegations of impropriety relating to the exchange
The parent company of Silvergate Bank has announced that the bank is to enter liquidation, less than a week after it revealed it missed its annual earnings filing. The crypto bank, which began serving Bitcoin users in 2013, was deeply affected by the collapse of FTX and has been hit by allegations of impropriety surrounding the activities of FTX and Alameda Research. Silvergate Capital Corporation put out a press release yesterday in which it blamed “recent industry and regulatory developments” for its need to wind down operations, with the company “considering how best to resolve claims and preserve the residual value of its assets”.
From High Highs to Low Lows
Silvergate was known to have been in trouble following the collapse of FTX, a state of affairs far removed from its peak in 2021 when it had as much as $14 billion in customer deposits and its stock price reached more than $200.
However, the past 18 months has seen the bank slide into the crypto winter with alarming speed, losing customers and trust as its links to FTX and Alameda, which culminated in rumors of a Department of Justice investigation.
Market Impact Will be Minimal
Silvergate last week had to inform the Securities and Exchange Commission (SEC) that it would not be able to file its annual report on time owing to ongoing capital concerns, leading to a 50% drop in its share price, and any hopes of survival were extinguished last night as it confirmed it has filed for liquidation. The share price dropped another 30% to $3 on the news, a far cry from its prior successes.
Bitcoin dropped some £200 as the news emerged, but it is thought that the impact on the crypto market will be minimal.