Coinbase Halts Payments With Crypto Friendly Bank Silvergate
Silvergate told the SEC yesterday that it may be “less than well-capitalized.”
Key Takeaways
- Crypto-friendly bank Silvergate told the SEC that it may be “less than well-capitalized” and that it was “reevaluating its business.”
- Coinbase has halted payments to and from Silvergate in response.
- Silvergate’s stock is down 45% on the day.
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Silvergate Bank is still suffering from the aftermath of the FTX collapse; it admitted to the SEC yesterday that it was uncertain about its ability to continue operating.
Silvergate’s Insolvency Fears
A crypto-friendly bank seems on the verge of biting the dust.
Leading U.S.-based crypto exchange Coinbase announced today that it would no longer accept or initiate payments to and from Silvergate Bank. The decision came after Silvergate admitted to the Securities and Exchange Commission yesterday that it may be “less than well-capitalized” and that it was “reevaluating its business.”
Coinbase stated that all exchange client assets continued to be accessible, and that the platform had taken proactive steps to ensure Coinbase customers would experience no impact from the change. It assured that institutional client cash transactions with other banking partners would also continue as usual.
Silvergate is a California-based bank. It operates a real-time payments system called the Silvergate Exchange Network, which enables customers to exchange government-issued currencies for cryptocurrencies.
The bank told the SEC yesterday that it could not file its annual financial report on time due to missing information on a number of subjects. “The company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the company,” it stated. “The company’s independent registered public accounting firm is also requesting detailed information relating to such matters and the company is responding to such requests.”
Silvergate recently announced a $1.05 billion loss in the fourth quarter of 2022 due to the “crisis of confidence” the crypto industry experienced following FTX’s collapse.
The company’s stock, SI, is currently trading for $7.49, down 45% on the day. It had previously reached an all-time high of roughly $237 in November 2021.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
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