Silvergate Capital Announces Liquidation of Silvergate Bank
- Silvergate Capital Corporation, the company behind the crypto bank, Silvergate Bank, has confirmed the liquidation of the bank.
- The decision was made “in light of recent industry and regulatory developments” and multiple firms ending their relations with the crypto bank.
- The Bank’s “wind down and liquidation plan includes full repayment of all deposits,” read the announcement.
- Veteran short seller, Marc Cohodes, predicted that the crypto bank will die within a week on March 4.
Silvergate Bank, a crypto bank and fintech firm that rose to popularity over the years, has failed to survive the prevailing crypto winter due to its exposure to the bankruptcy crypto exchange FTX. Silvergate Capital Corporation, the company behind the crypto bank, has announced that it will “voluntarily liquidate” the fintech firm because it seems like the best path for the firm looking at the current crypto market situation and regulatory developments.
According to an announcement on March 8, Silvergate Capital Corporation has decided to close the bank “in light of recent industry and regulatory developments” and multiple crypto companies reducing their exposure to the crypto bank. Many firms also scaled back their partnerships with the bank, including Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital.
The crypto community on Twitter saw this coming as many employees were handed over letters to prepare for the immediate shutdown of the company. It is crucial to note that Silvergate Capital Corporation also recently laid off a significant number of employees, as reported earlier by Bitnation. The parent firm of the bank laid off 40% of its workforce, or around 200 employees.
The Nasdaq-listed company also scrapped its ambitions to introduce a digital currency and wrote off the $196 million associated with its purchase of Diem Association’s technology and assets from META. At that time, the company said it now has to adapt to the “economic realities facing the digital asset industry today.”
On the other hand, Silvergate Bank’s “wind down and liquidation plan includes full repayment of all deposits,” according to the announcement, which adds that the company is “considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.”
Furthermore, Silvergate Capital also confirmed that Centerview Partners LLC is acting as financial advisor, Cravath, Swaine & Moore LLP is acting as legal advisor, and Strategic Risk Associates is providing transition project management assistance in the liquidation process, which seems to be the only way for the company to secure its future.
It seems that the prediction made by veteran short seller Marc Cohodes, who has been known for his attacks on the Nasdaq-listed company since last year, has come true. As reported earlier by Bitnation, Cohodes predicted that Silvergate Bank will collapse in a week, adding that the company “is a publicly traded crime scene” and that the CEO of the company, Alan Lane, belongs in prison.
Additionally, the company also shut down its digital asset payments network, the Silvergate Exchange Network (SEN), adding that the termination was a “risk-based decision.” This sparked rumors of liquidation in the crypto space. Interestingly, United States Judge Michael B. Kaplan ordered the bank to return $9,850,000 deposited by BlockFi, a bankrupt crypto lender that had exposure to FTX.
It is crucial to note that the company even met with officials from the Federal Deposit Insurance Corporation (FDIC) to prevent a possible liquidation. The officials visited the company’s headquarters last week and dug deep into the records and books of the crypto firm to come up with a possible solution.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
