What is Silvergate Capital shutdown, how it affects crypto market?
Silvergate delayed its quarterly earnings results to include the estimates of greater-than-expected losses.
New Delhi: Silvergate Capital’s (SI) stock plummeted after the firm announced it will shut down its operations and liquidate its subsidiary Silvergate Bank. One of the biggest lenders in the crypto market took the decision to shut down operations and it has come as a shocker for the market. Silvergate delayed its quarterly earnings results to include the estimates of greater-than-expected losses.
What is Silvergate Capital shutdown?
One of the leading banks for fintech and cryptocurrency decided to shut down its bank and liquidate it after the ‘recent industry and regulatory developments’. The company will fully repay all deposits as per the liquidation plan and as of the fourth quarter, the firm shows $11.35 billion in assets on its balance sheet.
The decision came in view of the bankruptcy of Sam Bankman-Fried’s FTX. Sam Bankman-Fried was declared bankrupt last year and was arrested with criminal charges on him.
SI stock fell 42% on March 9 to 2.84 after initially falling 50% overnight due to the shutdown announcement. Shares tanked more than 82% in the period between the earnings delay news and the Silvergate Bank liquidation announcement.
In the statement, the firm said that they plan to discontinue its Silvergate Exchange Network (SEN) on March 3, which was launched in 2018. While the company completes the wind-down process, all other deposit-related services will be operational.
How it impacts the Crypto market?
While it is not clear how exactly the Silvergate Capital shutdown will impact the whole market, but the crypto market has been trading at a low currently.
Coinbase Global (COIN.O), cut ties with Silvergate last week and dipped more than 7% while Miners Riot Blockchain (RIOT.O) and Marathon Digital (MARA.O) fell 11% and 10% respectively. Bitcoin was last trading at $20,754, which is a new low since January.