Amid the crisis surrounding Silvergate, the parent company of Silvergate Bank, Silvergate Capital Corporation, has revealed plans to shut down operations and “voluntarily liquidate” the bank. The crypto-friendly bank earlier ended its crypto payments network.
In a press release on March 8, 2023, Silvergate said it intends to cease operations and liquidate its bank, stating that the decision is the best path forward.
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind-down of bank operations and a voluntary liquidation of the bank is the best path forward. The bank’s wind-down and liquidation plan includes full repayment of all deposits. The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.”
Silvergate’s press release
The crypto-focused lender also said that winding down and liquidating the bank will follow applicable regulatory processes. Silvergate added that deposit-related services would continue functioning as the firm deals with the wind-down process.
The latest development comes shortly after Silvergate was said to be in talks with the US Federal Deposit Insurance Commission (FDIC) on how to save the bank and avoid bankruptcy. On March 3, Silvergate announced that it would discontinue one of its key offerings, the Silvergate Exchange Network (SEN), a payments network that enabled round-the-clock instantaneous transfers between institutional investors and crypto clients.
Binance and Coinbase deny exposure to Silvergate
The California-based lender has been struggling to stay afloat following the collapse of FTX. Silvergate said it would delay its form 10-k filing as the company, citing regulatory scrutiny and investigations as part of the reasons. The company, which reported a loss nearly of nearly $1 billion in Q4 2022, witnessed more losses in January and February 2023.
Silvergate’s woes deepened when some of the bank’s high-profile crypto clients, like Coinbase, Circle, Gemini, and Paxos, distanced themselves from the troubled lender as a precautionary measure.
In light of the company’s latest announcement, Coinbase and Binance have emphasized zero exposure to Silvergate while adding that customers’ funds are safe.