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The crypto-focused bank has been in financial crisis since the collapse of FTX, selling billions worth of assets this year as customers withdrew accounts.
Silvergate Capital plans to wind down its operations and liquidate its bank, due to its recent wave of financial issues and the turmoil of the crypto industry.
The bank said its wind down and liquidation plan includes a “full repayment of all deposits”. The organisation’s instant payment platform, Silvergate Exchange Network, was shut down last week.
The company said all of its other deposit-related services will remain operational as it “works through the wind down process”.
Silvergate shifted its focus to cryptocurrency in recent years and became a prominent player in the industry, purchasing the Diem cryptocurrency from Meta last year for $182m.
But the organisation entered a downward spiral after the crypto exchange FTX collapsed last year. The bank was forced to sell billions worth of assets throughout the start of 2023 as customer accounts were withdrawn.
“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,” Silvergate said in a statement.
The beginning of the end came last week when Silvergate delayed its annual 10-K, which is a report on a publicly traded company’s financial performance.
A filing with the US Securities and Exchange Commission (SEC) revealed the disarray Silvergate’s finances are in, along with concerns that it would not be able to keep operating.
As a result of this, many crypto exchanges moved to distance themselves from the bank to protect themselves from the fallout of a potential collapse.
On 2 March, crypto exchange Coinbase said on Twitter that it would no longer accept or initiate any payments with Silvergate “out of an abundance of caution”. Coinbase also said it has “de minimis corporate exposure to Silvergate”.
Coindesk reported at the time that the only major exchange that had continued transactions with Silvergate was Kraken, while others such as Circle, Bitstamp, Galaxy Digital and Gemini had all cut ties with the bank.
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