Coinbase Stops Payments With Crypto Friendly Bank Silvergate
Important takeaways
- Crypto-friendly bank Silvergate told the SEC that it may be “less than well capitalized” and that it is “reevaluating its business.”
- Coinbase has stopped payments to and from Silvergate in response.
- Silvergate’s stock is down 45% on the day.
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Silvergate Bank is still suffering from the aftermath of the FTX collapse; it admitted to the SEC yesterday that it was uncertain about its ability to continue operations.
Silvergate’s fear of insolvency
A crypto-friendly bank seems on the verge of biting the dust.
Leading US-based crypto exchange Coinbase announced today that it would no longer accept or initiate payments to and from Silvergate Bank. The decision came after Silvergate admitted to the Securities and Exchange Commission yesterday that it may be “less than well capitalised” and that it was “reassessing its business”.
Coinbase stated that all of its exchange client assets continued to be accessible and that the platform had taken proactive steps to ensure that Coinbase customers would not experience any impact from the change. It assured that institutional client cash transactions with other banking partners would also continue as usual.
Silvergate is a California-based bank. It operates a real-time payment system called the Silvergate Exchange Network, which enables customers to exchange government-issued currencies for cryptocurrencies.
The bank told the SEC yesterday that it was unable to deliver its annual financial report on time due to a lack of information on a number of subjects. “The Company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the Company,” it said. “The Company’s independent registered public accounting firm also requests detailed information relating to such matters, and the Company responds to such requests.”
Silvergate recently announced a loss of $1.05 billion in the fourth quarter of 2022 due to the “crisis of confidence” that the crypto industry experienced after FTX’s collapse.
The company’s stock, SI, is currently trading at $7.49, down 45% on the day. It had previously reached an all-time high of about $237 in November 2021.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH and several other crypto assets.
