Silvergate Announces Liquidation Of Business Having Suffered Huge Losses In Stock And Crypto Markets

Silvergate Capital made an announcement on Wednesday about the discontinuation of its operations. The news did not stop there because the firm has announced that it is liquidating its business.

Silvergate Capital had made a huge name in the cryptocurrency industry being one of the largest central lenders for the crypto firms.

The Bank Winds Down its Business

The bank announced on Wednesday that it is in the process of winding down its business. It will be liquidating its assets and business, plus its operations.

As the banking solution made the announcement, its share prices experienced a huge plunge. The stock market data shows that the trading prices for the company’s shares have plunged over 36%.

It was the after-hours trading session when the huge plunge was recorded in the company’s shares.

Huge Supporters of the Crypto Industry

The Silvergate Bank was among the most attractive and highly supportive banks for cryptocurrency firms. The crypto companies were attracted to the bank as it was a pro in cryptocurrencies.

It lent funds to all kinds of crypto firms whether they were new to the industry or old. This is the reason why the bank had formed strong partnerships and links with the major entities from the crypto industry.

It is worth mentioning that Silvergate bank was not the only banking solution that provided support to the crypto firms. Another major banking firm going by the name “Signature Bank” offered great support to the crypto industry.

Both banks are based in New York, US, but it is the Silvergate Bank that was the top choice among the crypto firms based in the country.

Current Holdings of Silvergate

As communicated by the officials, the bank currently has more than $11 billion worth of assets in its possession. These are the funds that the bank is left with after major outflows that took place following the departure of major crypto clients.

Some of the major exchanges and other crypto firms that left Silvergate’s side were Gemini and Coinbase, two major crypto exchanges.

After cutting ties with the financially troubled bank, most of the crypto firms have sided with Signature Bank. With Signature Bank being the only option, most of the major firms from the crypto industry have opened up their accounts there.

Due to the recent activities and developments, the overall assets being held by the Signature Bank have surged tremendously. As of now, the funds being managed by the Signature Bank are $114 billion.

Why Silvergate Bank is Winding Down its Business

The executives at Silvergate Bank recently communicated with the public and the shareholders about their current situation.

They revealed that they have been facing many regulatory and industry-related challenges. Given the current circumstances, they held a meeting to try and find a solution to the problems.

The best solution that they could come up with and had a consensus built was to wind down their business. Therefore, they will be shutting down their banking operations following voluntary liquidation.

More from the Executives

Apart from dropping the bad news, the bank has also shared information about the funds they currently hold.

They have confirmed that they will be proceeding with the repayment of their clients. All the funds that were deposited into their banking solution will be repaid.

The particular process will be put in place once they have completed the planned liquidation process. They will be selling off their shares to ensure that they do not lack in returning the funds to the respectful clients.

As far as the claims are concerned, the company is yet to share a plan for how it is going to deal with them.

For months, the bank had been struggling but tried to keep it a secret from the investors. It even announced the laying off of more than 40% of the total employees to cut costs to deal with the financial crises.

Turns out, the losses were much more than they had calculated. The company reported a $1 billion loss in the fourth quarter alone, which was enough to bring the firm crashing.