By Crypto-Friendly Silvergate Bank Has Fully Repaid All Deposit Liabilities, Now Holds Less Than $10,000
Last updated: November 23, 2023 05:07 EST
. 2 min read
Crypto-friendly Silvergate Capital has announced that it has fully repaid all remaining deposit liabilities.
On Wednesday, the lender said it has fully repaid all remaining deposit liabilities as part of a plan to wind down operations.
“Silvergate continues to focus on implementing the Bank Liquidation,” Silvergate said in a statement, adding that it now holds less than $10,000.
While the La Jolla, California-based bank said it has positive cash and equivalent balances after repaying deposits, it also has potential liabilities resulting from litigation, regulatory matters, and investigations.
Silvergate Entered Voluntary Liquidation
The repayment of all deposit liabilities comes after Silvergate’s decision earlier this year to wind down operations.
In March, the bank revealed its intention to voluntarily liquidate after suffering losses stemming from the collapse of the crypto exchange FTX.
Silvergate was among the lenders hit hardest by the fall of FTX in November last year.
As reported, Silvergate suffered a bank run following the collapse of FTX and had to sell $5.2 billion of debt securities it was holding on its balance sheet at a significant loss to cover around $8.1 billion in user withdrawals.
Consequently, it incurred a $718 million loss, which reportedly exceeded the bank’s total profits since 2013.
The bank had only $3.8 billion of deposits at the end of 2022, compared to $11.9 billion in 2021.
Crypto-Friendly Bank Failures
Some major crypto-friendly banks collapsed earlier this year amid a banking crisis partly attributed to the 2022 crypto meltdown and its ripple effects on traditional finance firms.
In early March, Silvergate Bank’s parent company, Silvergate Capital Corporation, announced that it had decided to wind down the bank’s operations and liquidate its subsidiary.
Just two days after the collapse of Silvergate, SVB Financial Group, one of the most popular lenders to Silicon Valley tech and growth startups, failed after a run on the bank.
During the same time, Signature Bank, another crypto-friendly bank, was shut down by US regulators over systemic contagion fears.
Following the closure of these three of the largest crypto-friendly banks, crypto firms have been left scrambling to find banking partners.
The collapse of these banks led to crypto companies scrambling to find new banking partners.
With traditional banks becoming more cautious about servicing the cryptocurrency industry, smaller regional banks and alternative payment service providers came onto the scene.
In the US, Customers Bancorp, a Pennsylvania-based lender, has become a popular choice, having launched a real-time payment platform to support the settlement of US dollar transfers underlying cryptocurrency transactions.
Other US lenders that have provided banking services to some cryptocurrency companies include Cross River Bank, Western Alliance Bancorp, and Axos Financial.
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