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The crypto-focused bank has finally made the call to shut down operations after struggling to stay afloat in the FTX aftermath.
End Of The Road For Silvergate
In their latest press release, Silvergate Capital Corp has announced that it will be winding down its operations and liquidating all assets in order to be able to return all deposits. The company, which is behind the crypto-focused Silvergate Bank, will be following applicable regulatory processes to shut shop and undergo voluntary liquidation. The company is also focusing on the way forward to resolve claims and preserve asset valuation to the best of its abilities.
The company statement said,
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind-down of Bank operations and a voluntary liquidation of the Bank is the best path forward. The Bank’s wind-down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.”
FDIC Efforts In Vain
The decision to wrap down operations completely does not come as a surprise, as the company has been struggling to stay afloat ever since the FTX debacle. Other than the financial blow, the company was further destabilized by the increased scrutiny from regulators and a criminal investigation by the Justice Department’s fraud unit into its association with both FTX and Alameda Research. Despite zero evidence of any wrongdoing, the troubles increased, with several other partners jumping ship. As a result, the bank had to incur deep losses as it sold off its assets and shut down the flagship payments network.
There was a ray of hope over the last few weeks when officials from the Federal Deposit Insurance Corp (FDIC) were looking into helping the company figure out a way to survive. However, the latest announcement from the company highlights that all efforts have failed to salvage the bank.
Flagship Payment Network Shutdown
The wind-down process is being overseen by the company’s financial advisor - Centerview Partners LLC and its legal advisor - Cravath, Swaine & Moore LLP. Strategic Risk Associates are also involved in the process of providing transition project management assistance.
The company had already discontinued the Silvergate Exchange Network in early March. The network acted as a conduit between crypto and traditional banking services and was considered a faster and easier alternative to wire transfers. With the discontinuation of this network, there is a gap in the market for a viable banking service in the crypto space.
Despite the wind-down process being started, all deposit-related services (other than the Silveragate Exchange Network) are still operational. The company has stated that customers will be notified of any further changes.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.