Silvergate, a small California-area lender that became a leading cryptocurrency bank overnight, will close its doors.
The San Diego-based company goes out of business amid turmoil in digital asset markets.
Among the explanations for the closure, the crypto bank says it is “the best way to go” due to “recent regulatory advances.”
When the decision was announced, Silvergate shares fell 40 percent in after-close trading on Wall Street on Wednesday, March 8.
In recent times, Silvergate had become the largest crypto bank in the United States, attracting more than $14 billion in deposits.
Its shares were worth $200 at the end of 2021 (now they do not exceed $3).
But the good times ended at the beginning of 2021 and got worse when the FTX exchange crashed.
Last week, Silvergate warned its investors that it could be forced to shut down, citing “problems with the investigation into its operations.”
Silvergate and its link with FTX
Silvergate was closely tied to FTX and Sam Bankman-Fried’s exchange-affiliated holding company, Alameda Research.
Since the fall of FTX, clients have been taking money out of Silvergate. There was talk of more than $8 billion through January 2023, forcing the company to sell assets.
“In light of recent developments by regulatory bodies in this industry, Silvergate believes that an orderly winding down of the bank’s operations is the best way forward,” the company said in a statement.
Since the confirmation of the Silvergate closure, the price of Bitcoin and other cryptocurrencies has collapsed by more than 5 percent.
In the case of Bitcoin, it started on March 9 at $21,500. A month ago it reached 25,000.
Silvergate took, among other businesses, the frustrated project of launching a stable currency by Facebook called Livra (later Diem).
The crypto landscape seems to have changed around the world. Last week it was learned that the financial services companies MasterCard and Visa would be analyzing pausing the launch of some products and services related to digital assets “until market conditions and the regulatory framework of the sector improve,” they said. Reuters and Dow Jones Newswires.
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