Silvergate Capital’s Wind Down and Liquidation Plan Causes Crypto Plunge
Shares of crypto bank Silvergate Capital (NYSE:SI) plummeted close to 31% on Thursday after the company announced it would wind down operations and voluntary liquidate Silvergate Bank.[0] The news sent several top cryptocurrencies selling off as well.[1] Silvergate had previously provided important infrastructure for the crypto ecosystem, having created a payments network that could instantly clear and settle fiat transactions between two parties on the network at any time.[2]
The company said in a statement that, “In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the Bank is the best path forward. The Bank’s wind down and liquidation plan includes full repayment of all deposits.”[3]
In addition, Silvergate Bank made a decision to discontinue the Silvergate Exchange Network (SEN).[4] Crypto exchange Coinbase and crypto financial services company Galaxy Digital had already dropped Silvergate as their banking partner this week.[5]
Senator Elizabeth Warren weighed in on Twitter shortly after Silvergate’s announcement, calling for regulators to “step up against crypto risk.”[6] Senator Sherrod Brown also shared his concern that banks that get involved with crypto are putting the financial system at risk.[7]
Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, directly pointed to the government as the culprit behind Silvergate’s collapse, saying that the bank’s demise was hastened by launching investigations and legal attacks against it.[8]
Although Silvergate is winding down operations, the company is still trying to figure out how to protect the residual value of its assets, including its proprietary technology and tax assets. Moreover, customers will be notified if there are any further changes.[4] The impact of this news is that it has raised questions about whether other crypto-related banks will be able to stay in business.[9]
0. “Silvergate stock falls Thursday after bank announces voluntary ‘wind down’” Yahoo Money, 9 Mar. 2023, https://money.yahoo.com/silvergate-stock-falls-thursday-after-bank-announces-voluntary-wind-down-173508763.html
1. “Why Shiba Inu Is Falling Sharply” Benzinga, 9 Mar. 2023, https://www.benzinga.com/markets/cryptocurrency/23/03/31284613/why-shiba-inu-is-falling-sharply
2. “Game over for Silvergate, labor data, JPMorgan sues Staley – what’s moving markets By Investing.com” Investing.com, 9 Mar. 2023, https://www.investing.com/news/economy/game-over-for-silvergate-labor-data-jpmorgan-sues-staley–whats-moving-markets-3026092
3. “Silvergate Slides on Plan to Wind Down Bank Operations and Liquidate” Bloomberg, 8 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-08/silvergate-plans-to-wind-down-bank-operations-and-liquidate
4. “Silvergate Capital Corporation Announces Intent to Wind Down Operations and Voluntarily Liquidate Silvergate Bank” Business Wire, 8 Mar. 2023, https://www.businesswire.com/news/home/20230308005795/en/Silvergate-Capital-Corporation-Announces-Intent-to-Wind-Down-Operations-and-Voluntarily-Liquidate-Silvergate-Bank
5. “$100 Billion Game-Changer: Crypto Could Be Heading Into Its Biggest Week Ever After Wild Bitcoin, Ethereum, BNB, XRP, Cardano, Dogecoin, Polygon And Solana Price Swings” Forbes, 5 Mar. 2023, https://www.forbes.com/sites/digital-assets/2023/03/05/100-billion-game-changer-crypto-could-be-heading-into-its-biggest-week-ever-after-wild-bitcoin-ethereum-bnb-xrp-cardano-dogecoin-polygon-and-solana-price-swings
6. “Elizabeth Warren Blames ‘Crypto Risk’ for Silvergate Bank’s Liquidation, Critics Dismiss Senator’s Claims as ‘Terribly …” Bitcoin News, 9 Mar. 2023, https://news.bitcoin.com/elizabeth-warren-blames-crypto-risk-for-silvergate-banks-liquidation-critics-dismiss-senators-claims-as-terribly-misinformed
7. “Silvergate Bank says it’s self-liquidating, winding down operations” American Banker, 8 Mar. 2023, https://www.americanbanker.com/news/silvergate-bank-say-its-self-liquidating-winding-down-operations
8. “Silvergate Bank folds, sparking a wave of finger-pointing and panic selling” Kitco NEWS, 9 Mar. 2023, https://www.kitco.com/news/2023-03-09/Silvergate-Bank-folds-sparking-a-wave-of-finger-pointing-and-panic-selling.html
9. “Silvergate Capital Is Shutting Down — Shares Are Tanking” The Motley Fool, 9 Mar. 2023, https://www.fool.com/investing/2023/03/09/silvergate-capital-is-shutting-down-shares-are-tan/