- Silvergate winds down and is in process of voluntary liquidation.
- Bank plans to repay all the deposits after the liquidation.
Silvergate, the crypto-friendly banking service wind down its operations and is in process of voluntary liquidation. The bank announced the stoppage of crypto payment services, which was major “the heart” of the firm, as the week began. The crypto ecosystem now will have one less banking support.
Silvergate news announcement states:
“ Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward.”
Silvergate Capital Corporation has a long history in the banking sector and stepped into the crypto line at the year 2014. It became an instant hit with major funding flowing in from digital currencies. The focus of the bank shifted from conventional real estate to crypto investors and exchanges.
The profitable business lifted up the bank, with its stock value reaching $220 in November 2021. Silvergate The current price of the stock is $2.76 and it fell 43.79% after the wind-down announcement.
Reasons for Silvergate Collapse
No big surprise in the fact, FTX, the devastated crypto firm is the sole reason for many such collapses in the crypto and financial environment. The bank had to witness a $1 billion loss in deposits because of FTX and its sister concerns.
As the depositors rushed back to withdraw the deposits, Silvergate had to liquidate the assets in its holdings. A total of $718 million loss was huge for the firm since 2013. The bank plans to repay all the deposits after the liquidation.
Financial experts are not surprised, as the bank was under serious criticism for trusting a volatile environment like cryptocurrency. CZ, the Binance CEO, made a confirmation of not holding a connection or any assets with Silvergate.
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