After the major crypto exchange FTX filed for bankruptcy, many problems have been witnessed by the crypto industry. Crypto bank Silvergate is also facing a bank run and its stocks are down about 47%.
FTX was a client of Silvergate like most crypto exchanges, so investors have been worried about deposit outflows from FTX and credit exposure through SEN Leverage. And they were right to be worried to a certain extent. In a mid-quarter update posted from the bank on Nov. 16 after the market closed, Silvergate said that total deposits declined from about $12 billion to $9.8 billion. Baked into that number is the roughly $1.2 billion of deposits from FTX that management had previously discussed.
About Silvergate
Based in La Jolla, California, Silvergate is a Federal Reserve member bank and the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry.
We leverage our technology platform and management team’s expertise to develop solutions for many of the largest fintech and digital currency companies and investors around the world. Our solutions are built on our deep-rooted commitment and proprietary approach to regulatory compliance. Founded in 1988, Silvergate has been consistently profitable for 20+ years and our stock is publicly traded on the NYSE (SI).
“The digital-asset industry has undergone a transformational shift, with significant over-leverage in the industry leading to several high-profile bankruptcies,” Silvergate said in a statement. “These dynamics have sparked a crisis of confidence across the ecosystem and led many industry participants to shift to a ‘risk off’ position across digital-asset trading platforms.”
In February 2022, Silvergate Bank acquired the technology and assets from Diem, the stablecoin project from Meta Platforms (formerly Facebook). Now the bank has halted its plans to launch a digital currency and has written off $196 million related to its acquisition of the technology and assets of Diem Association from Meta.
Even so, the bank emphasized that crypto would be its primary focus. “While Silvergate is taking decisive action to navigate the current environment, its mission has not changed,” the bank said. “Silvergate believes in the digital asset industry.
We leverage our technology platform and management team’s expertise to develop solutions for many of the largest fintech and digital currency companies and investors around the world. Our solutions are built on our deep-rooted commitment and proprietary approach to regulatory compliance. Founded in 1988, Silvergate has been consistently profitable for 20+ years and our stock is publicly traded on the NYSE (SI).
