Silvergate Announces Closure of Exchange Network

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The cryptocurrency bank Silvergate stated on March 3 that it is ending its network for exchanging digital assets, citing a “risk-based decision” as the reason for the decision.

According to a statement on the Silvergate website, “Effective immediately Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational.” 

According to a second ruling made by US Judge Michael Kaplan the same day, Silvergate must return the $9.8 million that BlockFi had paid. According to papers published on the website of BlockFi’s restructuring advisor, the bank was ordered by the court to instantly let the money out after the two businesses reached a deal in November 2022.

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Silvergate’s Collapse

One of the cryptocurrency businesses impacted by the FTX crash in November 2022 is BlockFi, along with Silvergate. The crypto bank experienced liquidity problems as a result of the bear market in cryptocurrencies before being struck by big outflows in the 4th quarter of 2022, which resulted in a $1 billion net loss.

According to reports, Silvergate borrowed $3.6 billion from the U.S. Federal Home Loan Banks System, a network of 11 local banks spread out across the country that give money to other financial institutions to help them deal with a spike in withdrawals.

The digital asset bank highlighted the significant deposit outflows and provided a list of measures to maintain cash liquidity, including selling debt securities and obtaining wholesale financing, in a report issued by the U.S. Securities and Exchange Commission.

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As companies like Microstrategy, Tether, Crypto.com, and Gemini cut ties with the bank, Silvergate is constantly facing rejections in the business of digital assets.

After Silvergate revealed the delay in submitting its 10-K report to the Securities and Exchange Commission (SEC), all of these losses began. The creative supplier of financial infrastructure services has requested an additional two weeks to finish its thorough report. The proposal caused its stock price to decline by more than 30%.

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