Silvergate Capital SI,
Prior to its collapse earlier this week, it served as one of the main banks for the crypto industry. The news comes just a week after the firm delayed its annual report to the US Securities and Exchange Commission, causing Silvergate Capital shares to slide.
Here’s an overview of what happened with the firm, and a timeline of its eventual performance.
What is Silvergate Capital?
Silvergate Capital used to be a California-based community bank that started in the late 1990s. In 2013, it turned to cryptocurrencies to offer traditional financial services to crypto companies, including exchanges such as FTX, which filed for bankruptcy in November 2022. Essentially making Silvergate an essential part of the whole of crypto before any other bank was even thinking about crypto. Industry.
The SilverGate Exchange Network is a service that SilverGate operates, an instant payment platform that enables SilverGate customers to send US dollars to any SilverGate account, even when traditional banks are closed at night and on weekends.
Even though the bank did not deal with cryptocurrencies directly, as withdrawals and deposits were made in fiat currencies, the majority of its customers dealt with crypto, meaning it was hit hard when the crypto market slumped last year. This included FTX, one of the largest crypto exchanges in the industry before it filed for Chapter 11 bankruptcy.
What happened?
Since its record high in November 2021, Silvergate Capital’s share price has fallen nearly 95% in just over a year. In March last year, investors were excited about the potential of Silvergate and its potential potentially issuing a stablecoin. then bought the property from Meta’s Diem, which was part of Meta Platforms’ effort to build a payments network.
Earlier this year, market makers such as BlackRock BLK,
and Citadel announces stake in Silvergate 7% And 5.5% respectively.
But things changed quickly earlier this month when Silvergate warned it was delaying its annual report to the US SEC and re-evaluating its ability to operate. Earlier this year the bank reported a $1 billion loss in its fourth quarter as investors withdrew deposits in the wake of the FTX bankruptcy as the exchange was once one of Silvergate’s largest customers. In January, the firm had also laid off 40% of its employees.
In January, a group of US senators sent a letter to the bank Questioning its role in FTX’s business practices. The letter also criticized the bank for taking on a loan from the Federal Home Loan Bank of San Francisco (FHLB), which “may introduce more crypto market risk into the traditional banking system.”
the bank was facing multiple lawsuits Which accuses the firm of failing to alert investors that it lacks the necessary safeguards needed to detect money laundering on the platform.
on Wednesday, the firm finally said It is shutting operations and liquidating its bank, causing the share price to drop more than 36% in after-hours trading.
“In light of recent industry and regulatory developments, Silvergate believes that an orderly closure of bank operations and a voluntary liquidation of the bank is the best way forward,” the bank said in a statement. “The bank’s closure and liquidation plan includes full repayment of all deposits.”
The company did not say how it plans to resolve the claims against its business.
bitcoin btcUSD price,
and ether ETHE,
The news hit as a result, but also because of a series of other events that happened this week.