Key points to remember:
- Silvergate, one of the largest crypto banks, has postponed its financial report, raising fears among many that bankruptcy may follow
- Coinbase, Paxos, Galaxy Digital and CBOE are just some of the companies that have ended their relationship with the bank
- Silvergate stock fell over -58% after the news broke, while Bitcoin and the broader crypto market plunged into the red zone
Silvergate share price has fallen -58% in the past 48 hours
Cryptocurrency bank Silvergate announced on March 1 that it would postpone its 10-K annual financial report, sparking widespread concern about the bank’s solvency among crypto firms. To make matters worse, some analysts believe Silvergate could be heading for bankruptcy.
Following the postponement of the financial report, Silvergate’s share price plunged -58% from $13.37 on March 1 to $5.61 at the time of writing.
The news also had a ripple effect on the cryptocurrency markets, with Bitcoin and Ethereum each losing more than -4% in the past 24 hours.
A number of cryptocurrency firms quickly cut ties with Silvergate and reassured their investors that they had no exposure to the bank. According to popular crypto personality “tier10k” – who has broken several major crypto stories in the past (like the infamous shutdown of cryptocurrency exchange BitZlato about a month ago) – Coinbase, Circle, Paxos, Galaxy Digital and CBOE are just some of the companies that have terminated their relationship with Silvergate.
According to “tier10k”, the reason for their decision is as follows:
“They (Silvergate) haven’t filed their annual report citing regulatory inquiries, possibly not being super creditworthy and also having doubts about the future of the business.”
In addition to the aforementioned companies, Attachedthe company behind the largest stablecoin in the world, and MicroStrategy, the largest public Bitcoin holder, both assured users that they had no or very limited exposure to the bank. MicroStrategy said it has an outstanding loan with Silvergate, but none of its 130,000 BTC is held by them.
According to CEHV partner Adam Cochran, the collapse of Silvergate is “going to be tough on crypto.”
“I don’t think retail investors realize how quickly market maker money moved through SEN, and how many crypto exchanges were/are banking with them,” he said. added.
David is a crypto enthusiast and personal finance expert. He has created numerous publications for different platforms. He loves exploring new things, and that’s how he discovered blockchain in the first place.