Growing List of Crypto Companies Cutting Silvergate Ties

Companies across the digital asset industry distanced themselves from Silvergate Thursday after the crypto-friendly bank delayed filing its annual 10-K report with the Securities and Exchange Commission (SEC)

In its notice to the SEC filed yesterday, the bank signaled its financial health could be different than previously disclosed, having suffered more losses during last year’s fourth fiscal quarter than reported in January.

In response, Silvergate’s share price fell by more than half on Thursday, down 53% to $6.35 as of this writing. The drop represents a 93% drop from the stock’s all-time high price of around $222, set in November 2021 during the previous crypto bull run.

Crypto-currency exchange Coinbase Tweeted that it would no longer facilitate payments using the La Jolla, California-based bank in US dollars. The decision was made “in light of recent events [and] a lot of caution,” the exchange explained.

Crypto.com, an exchange based in Singapore, told Decryption the company will also reject funds transferred to and from its platform through Silvergate. “Deposits and withdrawals through Silvergate have been temporarily suspended,” a company spokesperson said.

Luxembourg-based crypto exchange Bitstmap stated it would temporarily discontinue its support for bank transfers made through Silvergate at short notice. blog postsaid that future US dollar payments will be facilitated using Signature Bank, another bank that is popular with companies in the digital asset industry.

Cryptocurrency exchange Gemini, founded in 2014 by the Winklevoss twins, said it had stopped accepting customer withdrawals and deposits or fulfilling wire transfers through Silvergate on its platform.

Circle, the company that owns and issues the USDC stablecoin, said it was also stepping away from Silvergate. On Twitter, Circle revealed that it is currently “in the process of releasing certain services with [Silvergate] and tell the customer.”

Paxos, another company involved in issuing stablecoins – digital assets pegged to a fiat currency such as the US dollar – indicated that it had also stopped transfers to its account with Silvergate, adding it would “continue to process all outgoing payments.”

The CTO of stablecoin Tether stated on Twitter that the company also has no exposure to Silvergate.

Cboe Clear Digital said it is “suspending all transactions” with Silvergate bank, according to a see published by the company Wednesday. Mike Novogratz investment firm Galaxy Digital also warned it had stopped accepting or initiating transfers to Silvergate.

Silvergate previously reported that its bank deposits had fallen significantly amid the collapse of cryptocurrency exchange FTX, reporting a 68% drawdown of $8.1 billion in January that occurred during last year’s last fiscal quarter.

To meet the avalanche of withdrawals it faced during that time, the crypto-friendly bank secured a $4.3 billion loan from the Federal Home Loan Bank and sold around $5.2 billion of debt securities.

Banks drew the ire of members of Congress including Elizabeth Warren (D-Mass), who wrote a Open letter addressed to Silvergate CEO, Alan Lane. Lawmakers claim that Congress and the public deserve insight into the role Silvergate could potentially play in the FTX explosion.

Last month, the Department of Justice disclosed it examines the bank’s ties to a now-bankrupt exchange founded by disgraced crypto mogul Sam Bankman-Fried, who has been charged with a string of financial crimes following his exchange’s boom.

Investors on Wall Street, including billionaire hedge fund George Soros, recently bet against Silvergate, making it one of the shortest shares among publicly traded companies in the US Of all the shares in Silverfgate available for trading, 71% are currently short-sold, according to data from MarketWatch.