Various crypto businesses distanced themselves from Silvergate, a bank known for its support of cryptocurrency, following its decision to postpone the submission of its annual 10-K report to the Securities and Exchange Commission (SEC).
Firms that dropped Silvergate Capital Corp include but are not limited to:
- Cryptocurrency exchange Coinbase
- Luxembourg-based cryptocurrency exchange Bitstamp
- Business software company MicroStrategy
- Stablecoin USDC issuer Circle
- Another stablecoin issuer Paxos
- Mike Novogratz's investment firm Galaxy Digital
- Cboe Clear Digital
- ...
Coinbase tweeted that it is no longer accepting or initiating payments to or from Silvergate. "Client cash is held at FDIC-insured U.S. banks. When a client has a large dollar balance, Coinbase stores their cash in a U.S. government money market fund to keep it safe & liquid." Coinbase added.
At Coinbase all client funds continue to be safe, accessible & available.
— Coinbase (@coinbase) March 2, 2023
In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
In a recent blog post, Bitstamp announced that it would temporarily halt its backing of bank transfers made through Silvergate. The exchange stated that it will facilitate its U.S. dollar payments through Signature Bank instead, which is another bank that is widely used by digital asset companies.
Circle stated it was also backing away from Silvergate. Circle disclosed it was currently “in the process of unwinding certain services with [Silvergate] and notifying customers.”
1/ We maintain relationships with several banking partners. We are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers. Otherwise, all Circle services, including USDC are operating as normal.
— Circle (@circle) March 2, 2023
Another stablecoin issuer Paxos also warns it does not have any material exposure to Silvergate. "In light of recent developments with Silvergate Bank, Paxos has discontinued all SEN transfers and wires to our Silvergate account. " Paxos wrote in Tweet.
Statement from Paxos on Silvergate Bank: Paxos does not have any material exposure to Silvergate. Paxos’ priority has always been the protection of its customers’ funds and assets, and as such we leverage a diverse network of banking partners.
— Paxos (@PaxosGlobal) March 2, 2023
Galaxy Digital announced it has stopped accepting or initiating transfers to Silvergate and continue to have no material exposure to Silvergate. "This step was part of our vigorous risk-management process to ensure client and firm assets are secure. Galaxy remains committed to helping clients navigate the ever-changing market environment." Galaxy expained.
1/2 In light of recent developments, Galaxy has stopped accepting or initiating transfers to Silvergate. As a firm, we continue to have no material exposure to Silvergate, and this action was taken out of an abundance of caution.
— Galaxy (@galaxyhq) March 2, 2023
MicroStrategy said it has no assets custodied with Silvergate and is in no other way financially linked to the bank other than a commitment to repay a loan in 2025.
We have a loan from Silvergate not due until Q1 ‘25. There are mkt concerns re SI’s fin. condition. For anyone wondering, the loan wouldn’t accelerate b/c of SI insolvency or bankruptcy. Our BTC collateral isn’t custodied w/ SI & we have no other financial relationship w/ SI.
— MicroStrategy (@MicroStrategy) March 2, 2023
Cboe Clear Digital disclosed it was “pausing all transactions” with Silvergate bank, according to a notice published by the company Wednesday.
During the last fiscal quarter of the previous year, Silvergate reported a significant decline in its bank deposits, which it attributed to the downfall of cryptocurrency exchange FTX. In January, the bank reported a drawdown of $8.1 billion, representing a 68% decrease.
The list of crypto firms abandoning Silvergate is still growing.
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