Silvergate Crypto Payments Suspended After Suffering $1 Billion in Losses
Silvergate Capital has pulled the plug on the Silvergate Exchange Network (SEN) after the bank specializing in digital assets raised questions about its viability.
SEN, the bank’s platform for crypto payments, is one of the most popular services. Unlike regular wire transfers, which can take days to clear, the service enabled investors and crypto exchanges to make transfers at any time.
Doubts about viability affect the Silvergate Exchange Network
In the face of growing uncertainty, Silvergate customers have distanced themselves from the bank, encouraging customers to direct assets elsewhere while assuring them that their funds are safe.
With a 1 billion dollars in losses at the end of the fourth quarter and more losses in January and February, the crypto bank revealed in a filing on Wednesday that it may have to assess its viability.
Image: Yahoo News
In the same announcement, the bank acknowledged that it was the subject of investigations by banking regulators and the US Department of Justice, and stated that its ability to continue as a “going concern” over the next year was uncertain.
The following day, a number of notable crypto clients left the bank, including industry leaders Galaxy Digital and Coinbase, and the stock price fell over 60% before stabilizing on Friday.
The red flags
The SEN suspension came after banking authorities issued several warnings to the financial institutions they oversee regarding risks associated with crypto exposure, including volatility.
Crypto exposure carries inherent risks, according to experts. Unlike traditional investments, cryptocurrencies are decentralized and largely unregulated, leaving investors vulnerable to market volatility and fraud.
Cryptocurrencies also lack the stability of established financial systems, making them susceptible to sudden and extreme price fluctuations. In addition, the security of cryptocurrency exchanges and digital wallets may be compromised, leading to the loss of assets.
Investors are advised to assess their risk tolerance and thoroughly research all cryptocurrency investments before committing funds. It is important to understand the potential risks and benefits of investing in this rapidly developing market.
Bitcoin (BTC) total market cap at $431 billion on the weekend chart | Chart: TradingView.com
Silvergate launched SEN in 2017 to serve the growing demand for digital payment solutions. The network has gained popularity among institutional investors due to its ability to provide secure, reliable and efficient payment infrastructure for digital currency transactions.
The bank has positioned itself as a leader in the digital currency area, and offers a range of services to support digital currency trading and investment, including custody, lending and currency services.
Prior to its suspension, SEN has been recognized as an important development in the digital currency industry, providing a reliable and secure platform for institutional investors and businesses to trade digital currencies.
– Featured image from Sites at Lafayette
