Cryptocurrency Exchange Coinbase recently declare end of relationship with California-based crypto-friendly bank Silvergate. The exchange has stated that it will no longer accept or initiate payments to or from banks.
Coinbase has mentioned an “abundance of caution” in light of new developments due to the delay in the annual report of its former partner Silvergate. The exchange also said that all customer funds will remain “safe, accessible, and available.” Coinbase added:
Coinbase will facilitate institutional clients’ cash transactions with other banking partners and has taken proactive measures to ensure that clients are not impacted by this change.
Furthermore, Coinbase has stated that there will be no changes to the fiat withdrawal process after the end of the partnership with Silvergate. In addition, Coinbase has selected Signature Bank “effective immediately” and is asking customers to update their Coinbase withdrawal instructions to this New York-based commercial bank.
Adverse Reaction To Coinbase And Silvergate Shares
Coinbase, the second largest cryptocurrency exchange by spot trading volume with more than 108 million users, has seen its stock follow a downward trend following the news. Coinbase shares traded down more than 6% following the announcement.
Shares of the company, which trades under the ticker COIN, have paused growth on the Nasdaq Stock Market, trading at $58, down more than 9% on a broader seven-day basis, after hitting the $67.40 mark in late February. COIN has a market capitalization of $15.3 billion at press time.
On the other hand, Silvergate shares fell 29% premarket after delaying its annual report and raising concerns among investors.
Silvergate shares under ticker SI closed the market on Wednesday at $13.50 and are now trading at $7.75 on the Nasdaq, down 80%, after a solid first quarter, reaching $22 on February 16.
Previously, Silvergate reported a $1 billion loss in the fourth quarter of 2022 as investors withdrew capital amid the FTX debate.
The company said in a filed to the US Securities and Exchange Commission that it will not be able to file its annual report and extend the deadline for filing until March 16. The company added:
The company evaluates the impact of these subsequent events on its ability to continue as a going concern for twelve months after issuing its financial statements. The company is currently in the process of re-evaluating its business and strategy due to the business and regulatory challenges it is currently facing.
Silvergate now performs additional procedures and provides documentation requested by the accounting firm to complete the audit process. In addition, Silvergate expects a positive change compared to the fourth quarter report to address the concerns of investors.
Feature image from Unsplahs, chart from TradingView.com.