The California bank has primarily traded in cryptocurrency transactions.
(Photo: Bloomberg)
Denver The American crypto bank Silvergate is being liquidated. All deposits would be repaid, the institute is currently considering how the outstanding claims can be settled and the value of the remaining assets could be preserved, Silvergate announced on Wednesday after the market closed. The stock, which had already lost significantly in the past few days, fell 34 percent in after-hours trading.
The institute from San Diego, California, had positioned itself as a bank for the crypto industry and had close ties to the crypto exchange FTX, which surprisingly had to file for bankruptcy in November.
CEO Alan Lane has been fighting for the bank’s survival for weeks. The US Securities and Exchange Commission and the White House have been following developments closely. Coinbase, Circle, Paxos and Galaxy Digital also announced last week that they no longer want to work with Silvergate.
The 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 companies should be aware that they are taking high risks, “as the high volatility and vulnerabilities in the industry have shown over the past year,” the central bank said in a statement 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.
More: How the Biden government is targeting crypto companies