Silvergate Capital Corp has announced that it will cease operations and voluntarily liquidate after suffering losses from the spectacular collapse of crypto exchange FTX. Its shares fell 35% in after-hours trading.
The decision to close the bank was made after the firm disclosed last week that it was examining its capacity to continue as a going concern, admitting that it has sold further debt securities at a loss this year and that additional losses could leave the bank “less than well capitalized”
Silvergate said in a statement that the decision to close its bank was “the best path forward” given “recent industry and regulatory developments.” The plan for wind-down and liquidation includes the return of all deposits, the bank added.
The disastrous outcome for Silvergate, one of the crypto industry’s preferred banks situated in La Jolla, California, demonstrates the magnitude of the impact on the digital asset business from the bankruptcy filing of FTX in November, which failed to fund customer withdrawals.
Following Silvergate’s announcement, the cryptocurrency exchange Coinbase stated that it had no client or corporate cash in Silvergate, while Binance’s CEO Changpeng Zhao stated that the company did not experience any asset losses at Silvergate.