Crypto Firm Ledger asks customers to send funds to Signature Bank, not Silvergate
(Bloomberg) — Crypto derivatives platform LedgerX, one of the few solvent parts of the bankrupt FTX empire, will no longer use the embattled Silvergate Bank to receive domestic wire transfers starting Wednesday.
Most read from Bloomberg
The company will use Signature Bank going forward, according to an email LedgerX sent to customers that was reviewed and verified by Bloomberg. LedgerX already had an existing relationship with Signature, according to two of the people who confirmed the email. LedgerX did not respond to a request for comment.
In a statement, Signature Bank said that “While we cannot comment on specific customers, we are still doing digital asset deposits.” The bank revealed in December that it was reducing its exposure to the sector, but not completely. Silvergate did not immediately respond to requests for comment.
FTX US, the American affiliate of FTX, completed the acquisition of LedgerX in October 2021, more than a year before the crypto exchange’s shocking fall into bankruptcy. LedgerX is registered with the US Commodity Futures Trading Commission, and was an important part of FTX co-founder Sam Bankman-Fried’s efforts to gain power and influence in Washington. The platform previously sought approval from the CFTC to handle crypto derivatives trading without intermediaries, but withdrew its controversial application after FTX imploded.
Read more: FTX withdraws major plan to overhaul how crypto derivatives are traded
With about $303 million in cash on hand as of a Nov. 17 filing, the company is now one of the most attractive assets available in FTX’s bankruptcy proceedings. Initial bids for LedgerX were due on January 25 ahead of a final auction scheduled for March 7. Bidders have not been disclosed, but crypto players such as Blockchain.com, Gemini and Kalshi were said to be among those interested.
Read More: FTX’s LedgerX Auction Shows Need for CFTC Influence on M&A: Official
Silvergate emerged as the premier bank for the crypto industry when many other financial institutions chose to steer clear of the sector over regulatory and compliance concerns. Signature also carved a niche for itself as a banking crypto firm, although it is larger and more diversified than Silvergate.
Bankman-Fried’s FTX and related entities also had accounts with Silvergate Signature. Since the crypto exchange collapse, Silvergate in particular has faced increased scrutiny from lawmakers as well as short sellers.
Bloomberg previously reported that the Justice Department is investigating Silvergate’s relationship with FTX and Alameda Research, the related hedge fund identified as a key culprit in the stock market’s fall. Silvergate faced a run on deposits in the wake of FTX’s collapse that forced it to sell securities and rely on short-term advances from the Federal Home Loan Bank to bolster its balance sheet.
–With assistance from Max Reyes.
Most read from Bloomberg Businessweek
©2023 Bloomberg LP
