Silvergate’s Cryptocurrency Payments Network Shuts Down as Stocks Plunge to Record Low

Cryptobank Silvergate has shut down its digital asset payments network because it was a “risk-based decision.”

The announcement comes after the bank’s shares plunged more than 59% last week on fears of a possible bankruptcy.

Silvergate ends the exchange network

Silvergate announced on its website on March 4 that it has shut down the Silvergate Exchange Network (SEN). All other deposit-related services remain operational.

SEN allows bank institutional investors and digital currency customers to transfer USD between their accounts 24/7.

Silvergate also provides a stablecoin infrastructure platform, digital asset custody management, and secured lending services.

Shares of the bank, SI, listed on the New York Stock Exchange (NYSE), hit an all-time low Thursday, down more than 97% from their peak in November 2021. On Friday, shares closed up 0.9% at $5.75 per usual. commerce.

Judge Michael B. Kaplan Bank returned the $9,850,000 deposited by BlockFi.

BlockFi, just like Silvergate, is one of the companies affected by the fall of FTX in November 2022. After the fall, Silvergate reported a loss of $1 billion in the last quarter and cut 40% of its staff.

Federal prosecutors are investigating Silvergate’s role in the collapse of FTX. The investigation revolves around the bank’s hosting of accounts linked to the business of former FTX CEO Sam Bankman-Fried.

Cryptocurrency firms are abandoning Silvergate amid solvency concerns

On March 1, the bank announced that it would delay filing its annual 10-K financial report, which many feared was about to file for bankruptcy.

A day after the announcement, crypto firms Coinbase, Paxos, Circle, Galaxy Digital and Bitstamp said they would scale back their partnerships with the bank in some form.

“Coinbase will facilitate cash transactions for institutional customers with our other banking partners and has taken proactive measures to help ensure that customers do not experience any impact from this change.”

Coinbase said

Furthermore, MicroStrategy and Tether have publicly denied having any meaningful dealings with Silvergate Bank.

A 10-K report is a document required by the Securities and Exchange Commission (SEC) that provides a comprehensive overview of a company’s business and financial condition.

Silvergate requested an additional two weeks to complete the report for fiscal year 2022.

The bank also revealed that it sold additional debt securities this year at a loss. More losses mean that the bank may be “less than well capitalized”.