The bank is currently examining whether it can still avert insolvency.
(Photo: Bloomberg)
new York The close ties to the crypto industry are fatal for the Californian bank Silvergate. The bank is currently evaluating whether it can avert bankruptcy, as it announced on Wednesday.
The institute informed the US Securities and Exchange Commission (SEC) that it would not be able to submit its annual report by mid-March as planned because the capital position had continued to deteriorate.
Silvergate is one of the few banks in the USA that has sought proximity to the crypto world. The FTX stock exchange, once the third largest in the world, which collapsed in November, was also one of Silvergate’s customers. The bank has already reported a loss of $1 billion for the fourth quarter.
The share price fell 30 percent in after-hours trading. The paper had already lost almost 90 percent of its value last year due to the turmoil surrounding crypto trading venues after the price had multiplied during the crypto hype of the past few years.
The Silvergate case also fuels the debate about stricter regulations. At the beginning of January, the US Federal Reserve, which is also an important bank regulator, together with two other authorities issued a warning to financial institutions.
Fed warns banks of high risks in crypto business
Banks that work with crypto firms should be aware that they are taking high risks, “as demonstrated by the high volatility and vulnerabilities in the industry over the past year,” a statement said at the time. The authorities were still examining whether and in what way banks could do business with crypto companies under the existing regulations.
According to media reports, US President Biden’s administration is considering cutting off access to the banking system for many crypto companies. That would be the end of many providers.
Meanwhile, SEC chief Gary Gensler has stepped in and has launched investigations into neo-broker Roobinhood and exchange Coinbase. Coinbase competitor Kraken paid a fine in February to settle a lawsuit out of court.
More: How the Biden administration is targeting crypto firms