The crypto market continues to lurch from the recent Silvergate crisis. Most recently, the crypto-focused bank, Silvergate, had delayed filing its annual 10-K report with the Securities and Exchange Commission (SEC), which has aggravated its downfall, which was previously precipitated by the collapse of FTX last year.
According to its recent filing, “a number of circumstances” have caused the sale of “additional investment securities beyond what was previously anticipated.” In this notice, the bank has implied that its financial health is different from what was mentioned in the previous disclosure.
The bank had sustained significant losses in its fourth financial quarter of the previous year compared to what was reported this January. As a consequence, Silvergate has been forced to re-evaluate “the impact that these subsequent events have on its ability to continue as a going concern.”
With Silvergate crumbling over the past week, most major altcoins have been suffering on their daily charts now. Silvergate’s stock price tumbled as it halved, registering close to a 58% plunge. The recent crisis has made a host of major crypto firms sever ties with Silvergate Capital as the bank’s financial crisis is a threat to the industry.
Crypto Firms Suspend Partnerships With Silvergate
The list of crypto firms that have decided to scale back their ties with Silvergate seems to be increasing. Recently, Coinbase tweeted and announced that it would not facilitate payments using Silvergate.
This decision came after the recent events that have shaken the broader market, as mentioned by the crypto exchange. Soon after that, Crypto.com, an exchange based in Singapore, also decided that it would not accept funds transferred to or from Silvergate.
Both deposits and withdrawals through Silvergate’s platform were temporarily suspended. Gemini, another crypto exchange, also stopped accepting customer withdrawals and deposits from Silvergate. Wire transfers were also stopped by Gemini.
The digital asset financial services company Galaxy Digital issued a statement on Twitter that echoed the same sentiments. Paxos, the stablecoin issuer, has also discontinued transfers to Silvergate’s account; however, the company will still continue to process all outgoing payments as per their recent statement.
Circle, the firm that issues the stablecoin USDC, also took similar steps. It mentioned that currently it is “in the process of unwinding certain services with [Silvergate] and notifying customers.“
Additionally, Bitstamp issued a statement, which read:
Please be aware that Bitstamp cannot be responsible for any funds deposited into the Silvergate bank account. If you do choose to deposit funds into this account, you do so at your own risk.
After a 58% drop in their stocks, Silvergate was forced to sell its shares at a sharp loss right after a rush of customers ran to the bank to withdraw billions of dollars in deposits.
The flurry of outright terminations of relationships with Silvergate has been followed by reports of the bank being the subject of an investigation from the United States Department of Justice.
This inquiry has been made over the alleged involvement in the FTX collapse. Former FTX CEO Sam Bankman-Fried, who has been charged with wire and securities fraud along with money laundering, had held an account in Silvergate.
