The parent company of crypto-friendly bank Silvergate announced on March 8 that it’d cease operations and liquidate its assets. The liquidation plan calls for the repayment of all deposits.
In Wednesday’s official announcement, the company said the decision to enter liquidation was due to “recent industry and regulatory developments”:
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.
As a reminder, the wave of concern about Silvergate’s solvency began last week when the bank delayed its 10k annual report. Immediately following that news, many of its clients, such as Coinbase, Paxos, and Gemini, announced that they’d cut ties with the bank due to caution.
Related: Silvergate stock plunges
Now Silvergate is considering how best to resolve its claims and preserve the residual value of its assets, including proprietary technology and tax assets. The bank has hired Centerview Partners LLC as a financial advisor, Cravath, Swaine & Moore LLP as legal counsel, and Strategic Risk Associates as a transition project manager.
Silvergate, which has been providing banking services to cryptocurrency companies since 2013, recently announced that it had discontinued its internal settlement tool, the Silvergate Exchange Network (SEN). The company had nearly 500 crypto customers when it filed for an IPO in November 2018 and traded on the New York Stock Exchange.
Although the bank isn’t on the Federal Deposit Insurance Corporation’s (FDIC) “failed banks” list because it’s winding down voluntarily and isn’t in FDIC receivership, it could be the first major bank to fail since October 2020 and possibly the largest bank with such a fate since 2009, as CoinDesk reported.
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