The bankruptcy of FTX takes away one of the big names in the ‘crypto’ world. Silvergate Capital, a bank specializing in cryptocurrency transactions Announces cessation of operations and “voluntary liquidation” of Silvergate Bank. The firm has secured all its deposits of $6,000 million. “In light of the latest industry and regulatory developments, Silvergate believes that an orderly shutdown of the bank’s operations and voluntary liquidation of the organization is the best way forward,” the company said in a statement.
It didn’t come as a big surprise to crypto companies. Silvergate had notified the US regulator (SEC). Delayed annual report corresponding to fiscal year 2022 because it was immersed in the process of evaluating the viability of its business and strategy in light of the commercial and regulatory challenges it had to face. Specifically, the firm was referring to a loss of $948.6 million in 2022 compared to a net attributable profit of 75.5 million recorded the previous year.
Investors began to distrust the company. The bank’s shares fell more than 63% in a week.According to what XTB said, though its bankruptcy will have temporary effects in the cryptocurrency space. “We already know how resilient certain blockchains and the ‘crypto’ community are,” says Darío García, an analyst at the brokerage firm, adding that “a new asset will always emerge from the ashes of previous ones and alternative payment channels.” . Recent bankruptcies in the industry have been handled by ‘exchange’ platforms Genesis and BlockFi. Coinbase, another big name in digital currencies, announced that it is withdrawing from the Japanese market and cutting 20% in its global workforce.
The poor results are largely due to the bankruptcy of the FTX platform, which triggered a massive deposit run from the asset in November. In the last three months of the year alone, its deposits fell 52% from $13,238 million recorded in September last year. The bank last month He had to request an advance of $4.8 billion from the Federal Home Loan Bank. managing withdrawals from customers in excess of $8,000 million. In an effort to survive, the bank took drastic measures, including laying off about 40% of its staff and shutting down its proprietary 24-hour payment network, Silvergate Exchange Network (SEN).
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Their situation has been made worse by the increasing SEC scrutiny over the activities of cryptocurrency companies in the United States. In December, a group of US senators asked Silvergate to provide full records of the FTX transactions it processes. Alan Lane, the bank’s CEO at the time, stated that the bankrupt platform’s deposits represented it. less than 10% of total deposits from all digital asset clients To remove any doubts about a possible bankruptcy, the company
Despite these statements, it has yet to respond to multiple inquiries from US authorities, including an investigation by the US Department of Justice’s (DOJ) fraud unit. Silvergate opened a fraud investigation in January to investigate ties between FTX and its trading arm Alameda Research.. “However, although the bank is under investigation by regulators, Silvergate has yet to be charged with misconduct,” says Garcia.