According to several reports, the crypto-friendly bank Silvergate will liquidate financial institutions and reduce operations. The bank is facing problems after the collapse of one of its main partners, crypto exchange FTX.
Today’s announcement appears to be an inevitable step after weeks of speculation and concern from investors about Silvergate’s capacity to continue operating. As Bitcoinist reported, Bank shares suffered from a massive downtrend as the company reported a decline in liquidity and delayed annual reports.
Another Blow To The Industry, Silvergate Closes Its Doors
According to a Bloomberg report, Silvergate confirmed it will cease operations due to the recent incident. The company issued the following statement:
In light of recent industry and regulatory developments, Silvergate believes that orderly operations of the Bank and voluntary liquidation of the Bank is the best way forward.
The crypto-friendly bank is committed to refunding all deposits to its customers. The company has hired Centerview Partners as its financial advisor and Swaine & Moore, which will provide legal services.
The company added:
It winds down and the bank’s liquidation plan includes repaying all deposits. The company also considers how best to resolve claims and preserve the residual value of its assets, including proprietary technology and tax assets.
When the news of the liquidation of the crypto-friendly bank broke, its shares suffered critical losses. The company, trading under the ticker SI, is exchanging hands at around $5 as of this writing.
BlackRock, MicroStrategy, and other big companies in the legacy financial industry support the company. The liquidation could have unintended consequences for the fledgling industry as confidence in the sector continues to falter.
The collapse of FTX has translated into regulatory scrutiny from regulators, the bankruptcy of several companies, and reputational damage to a new asset class. In the long term, this FTX effect could continue to ripple across the crypto sector.