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  • ton = $7.92 -0.13 (-1.63 %)

  • btc = $66 400.00 180.02 (0.27 %)

  • eth = $3 560.55 27.99 (0.79 %)

  • ton = $7.92 -0.13 (-1.63 %)

9 Mar, 2023
1 min time to read

The crypto bank is ceasing its operations.

Silvergate Bank, a major player in the crypto world, has recently announced that it will be closing and returning deposits. Silvergate Capital Corporation, the bank's holding company, explained in a press release that the decision was made "in light of recent industry and regulatory developments." It had become clear that the company was struggling, along with some of its most high-profile clients such as FTX and Genesis. In fact, the bank lost a billion dollars in one quarter when its customers withdrew $8.1 billion, according to its January earnings report. On March 1st, it filed a document stating that its financials were even worse than the quarterly report had indicated.

There are concerns about what will happen to the crypto industry without Silvergate, particularly when it comes to companies seeking funding. Some worry that without a regulated bank to turn to, these companies may resort to less regulated institutions, thereby increasing risk for everyone involved. The bank will be liquidating "in an orderly manner and in accordance with applicable regulatory processes," while also considering how to resolve claims and preserve its assets, including its proprietary technology and tax assets. Silvergate Exchange Network, which allowed crypto exchanges to move money between themselves and other institutions, was also shut down.

As this situation unfolded, companies like Coinbase, Crypto.com, and Paxos began to distance themselves from Silvergate. Even Tether, a stablecoin, sought to sever its ties with the bank. With so few allies and the government scrutinizing its role in the FTX meltdown, Silvergate's collapse will almost certainly be closely examined by lawmakers who are concerned about the potential contagion of risk in the traditional financial sector.

Senator Sherrod Brown, the chair of the Senate Banking, Housing, and Urban Affairs Committee, expressed his concern about the situation. He noted, "Today we are seeing what can happen when a bank is overreliant on a risky, volatile sector like cryptocurrencies. When banks get involved with crypto, it spreads risk across the financial system, and it will be taxpayers and consumers who pay the price."