- The company will pay off all deposits
- But the news hit the crypto market hard.
- Bitcoin lost $22,000 support
Silvergate Capital Corporation announces on the closure of its activities and the liquidation of the banking unit. This company has provided lending services to numerous businesses in the cryptocurrency industry.
“In light of recent industry developments and regulations, Silvergate believes that the bank’s planned winddown and voluntary liquidation is the best way forward.” the company said in a press release. They added that they would pay off all deposits.
Against the backdrop of such a statement, Silvergate shares, which are listed on the NYSE, fell by more than 43%. Now they cost about $3. Since the beginning of the year, the shares have lost 87% in their price (January 1 they traded for $21.95).
My opinion is that there is a cleanup of the American market after the collapse of FTX, which exposed a bunch of problems. The lack of a proper level of elaboration of procedures for monitoring and auditing the activities of crypto companies. Now everyone who was connected with this in one way or another, directly or indirectly, will be subjected to a very meticulous check. Accordingly, we already see that Chinese companies, companies associated with binance, were the first to fall under the distribution. This hasn’t directly impacted Coinbase yet, but it’s possible their staking program will. Here Silvergate Bank is one of the largest gateways. I think many are already aware of this situation, there were two banks, Signature and Silvergate, which worked with crypto companies and allowed them to deposit money into crypto without using offshore stories like Tether. Therefore, Circle and Coinbase will remain for now, but in general this is great news, because it indicates the focus of regulators on the crypto market. This market is not going anywhere, I have repeatedly said that the market has taken place and settled down. Liquidity does not go away, the price that is currently available for the largest assets is secondary in relation to the number of stablecoins there and to the trading volume. That is, there is life, it will continue, so this is a good start for a great story. This means now the Americans will try to remove all corrupt, inadequate and criminal elements from the market through litigation. But there was a case when Binance US won a lawsuit against the SEC against Voyager. Well, not exactly with the SEC, but contrary to his comments and position. It is a very rare precedent when a crypto company finally wins. In the future, under the next bullrun, I think it will begin there in the next year or two, there will be not 2 banks, but 20, which will act as gateways. There will be a currency of central banks in America, perhaps, or some kind of state stablecoin. That is, these are all links of one such large chain of regulation of the industry, and I think that not only officials, but also company lobbyists are involved in this regulation, primarily regarding the Coinbase exchange.
Although information about the problems of the bank has been known for a long time, the crypto market reacted heavily to their bankruptcy. Bitcoin lost 2.34%, breaking through the $22,000 support line. Ethereum fell 2% to $1,535. Solana fell by 8%.
Silvergate Capital notified the SEC last week that they would have to delay filing their 10-K financial report due to business and regulatory issues. In response, many crypto-exchanges and trading platforms announced that they were cutting off business ties with this bank. This has already been done by crypto.com, Coinbase and Galaxy Digital.
Last Friday, Silvergate Bank stopped the Silvergate Exchange Network, a payment network that allowed transactions for crypto and institutional clients.