Crypto Bank Silvergate Says It Will Shut Down

Silvergate Capital (SI), the San Diego crypto bank under investigation by regulators, said it shut down, sending ripples through an industry that’s been on edge since the collapse of FTX in November. Its shares lost almost half their value.

“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 company said in the statement. 

Shares of the California-based crypto bank plunged over 40% in extended trading on the heels of the announcement.

Silvergate said part of the liquidation plan includes full repayment of all deposits, later adding that all other deposit-related services will remain operational as the company goes through the process of closing operations. Customers will be notified of any further changes.

Just last week, shares of Silvergate sank as much as 45% after the company said it would delay filing its annual report due to pending investigations by the U.S. Department of Justice and other regulators. This caused major crypto-industry players Coinbase and Paxos to cut ties with Silvergate.

Ties to FTX Collapse

The bank’s ties to collapsed crypto exchange FTX and Alameda Research may be one of the motivations behind the investigations. Last week, Silvergate Bank said on its website that it would discontinue the Silvergate Exchange Network (SEN) as well. 

Silvergate’s shares have lost over 80% of their value since the FTX collapse in November. In January, the Wall Street Journal reported that Silvergate’s customers withdrew $8.1 billion in digital deposits in the fourth quarter of 2022 following FTX’s collapse, causing the bank to sell assets at a loss in an effort to recover.