Silvergate Crashes – Crypto Banking Giant Announces Its Shutdown
Released Wednesday evening, the latest titan within the crypto industry has announced their downfall. Silvergate Bank, a leading financial institution for fintech and cryptocurrency, just stated they will terminate operations as uncertainty unfolds in the industry. Following FTX’s collapse, a ripple effect has caused firms across the crypto space a myriad of issues, ranging from lack of investor confidence, increased regulatory concerns, and even financial spells from exposure to FTX’s services. Nevertheless, Silvergate is the second largest crypto bank, with assets worth over $11 billion. In their statement, they claimed they will voluntarily liquidate all available assets to ensure deposits be fully repaid. In the meantime, Silvergate has closed down all operations except their deposit services as they work on repaying clients and customers until their full obligations have been met.
With Silvergate’s announcement heard after the market’s close, their stock price has plummeted over 40% in the after-hours trading. As investor sentiment towards risky assets has declined in recent months, Silvergate began to have issues with withdrawals that spanned billions of dollars. Without the capacity to continue operating a profitable business, they calculated the viability of the firm last week, ending with the result heard Wednesday evening. In light of the shocking news, JPMorgan also made headlines by ending its banking relationship with Winklevoss crypto exchange Gemini. With increases in crypto-regulation and FTX’s alleged fraud under trial, the cryptocurrency world has to make large leaps to bring investor confidence back to its 2021 highs.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.