The crypto industry distances itself from Silvergate as banks collapse

Several crypto firms on Thursday issued statements aimed at distancing themselves from crypto-friendly Bank Silvergate, which saw shares free-fall Thursday after the company delayed its annual report and said it would report more losses.

Coinbase, Paxos, Galaxy Digital, Gemini, BitStamp, Crypto.com, and Circle have all issued statements saying they have cut ties with a significant partner that has been connecting them to the traditional banking system. MicroStrategy also addressed concerns about a Silvergate loan in the event of the bank’s bankruptcy.

The move away from the cryptocurrency industry adds another business challenge for Silvergate, which gave notice late Wednesday that it would not face an extension on March 16 to file its annual report and called into question its ability to continue as a going concern over the next 12 months.

Shares of the company were down 56% in afternoon trading Thursday.

“Coinbase has minimal corporate exposure to Silvergate,” the company said He said. Coinbase added that it “out of an abundance of caution” will no longer accept or initiate payments to or from Silvergate.

New York-based crypto trust and stablecoin issuer, Paxos, too announce She was cutting ties with Silvergate. Paxos said it has stopped transfers from its Silvergate account and has no physical exposure to the bank. “We benefit from a diverse network of banking partners,” said Paxos.

UK-based Galaxy Digital, Bitstamp and Crypto.com also said in data shared with Yahoo Finance that they had halted banking transactions with Silvergate “out of an abundance of caution” and that neither company faced material losses.

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If you choose to deposit funds into this account, you do so at your own risk added.

twin He said It has zero customer funds and zero GUSD [stablecoin] with Silvergate” and stopped processing transactions through Silvergate.

“We maintain relationships with several banking partners. We are sensitive to concerns about Silvergate and are working to unpack certain services with them and notify customers,” He said Stablecoin issuer, Circle. “Otherwise, all of Circle’s services, including USDC, are operating as normal,” Circle added.

MicroStrategy, the largest owner of bitcoin He said A bitcoin loan with Silvergate, which will not be due until the first quarter of 2025, “will not accelerate” if Silvergate faces bankruptcy.

The Government of El Salvador’s Chivo Wallet also considers Silvergate a major financial partner.

Slivergate CEO Alan Lane, second from right, is applauded as he rings the opening bell of the New York Stock Exchange before kicking off his bank’s IPO, Thursday, November 7, 2019. (AP Photo/Richard Drew)

Silvergate, in a statement with the Securities and Exchange Commission on Wednesday, said the recent changes have altered the timing and findings of its annual report. Citing both financial and regulatory challenges, the company said it is assessing how these changes will affect its “ability to continue as a going concern through the twelve months following the issuance of these financial statements.”

Silvergate also said it sold additional debt securities to pay interest on nearly $4.3 billion in loans obtained from the Federal Home Loan Bank of San Francisco. He also cited ongoing regulatory investigations, private litigation, and ongoing inquiries from lawmakers as potential risks moving forward with the business.

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According to data analytics firm S3 Partners, 82% of Silvergate’s total float is estimated to have been shorted, making it the most shorted US stock by amount shorted. Silvergate shares have lost more than 95% of their value over the past year.

Elsewhere, cryptocurrency exchange Kraken said it would limit transactions with Signature (SBNY), another US bank that caters to crypto companies, such as Bloomberg first reported it on Wednesday. This step reverts to the previous signature resolution in early December to reduce its business with cryptocurrency-related companies.

“Kraken maintains a number of different funding methods to ensure customers are always able to deposit and withdraw from their accounts. Consumers can still access a range of payment methods through our other partners. Customers can reach out to our customer engagement team to select what options are available to them,” a spokesperson said. Kraken in a statement.

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