Latest Bitcoin News: Crypto Bank Closed Operations
Latest Bitcoin News: Bitcoin collapses, a major cryptocurrency bank collapsed and closed all its operations. The company announced that it will formally close its operations and liquidate its assets.
Latest Bitcoin News: The official statement from Silvergate
“The Bank ‘s winddown and liquidation plan includes the full refund of all deposits. The company is also considering how best to resolve the claims and preserve the residual value of its assets, including its proprietary technology and tax assets”.
However, the entity stressed that its current forward-looking statements ” are not guarantees of future performance ” and are subject to changes or risks that are “difficult to predict.”
This means that the cryptocurrency bank does not guarantee that it will be able to respond to the return of all deposits, successfully resolve claims, liquidate your assets in an orderly manner, preserve their residual value, or file any reports that are requested.
How did Bitcoin react to this new closure?
Just a few days after announcing the closure of its cryptocurrency payment network, the digital asset bank Silvergate Capital Corporation reported that it will suspend all its operations and that it will liquidate its activity as a financial institution.
The company explained that its definitive closure will proceed in an orderly and voluntary manner , since it considers that it is the “best way to go.” In addition, it is clarified that the bank will make the full refund of all deposits and will evaluate “the best way to resolve the claims.”
Given this new drop in the cryptoactive market, the price of Bitcoin (BTC) fell by 4.8% and fell from US$23,700 to US$20,930 at the time of writing the note. In this line, most of the digital currencies presented abrupt reversals. Ethereum (ETH) is down 3.65%, Cardano 3.42%, Dogecoin 4.33% and Ripple 3.74% in the last 24 hours.
On March 3, 2023, Silvergate Bank had announced that it would close the services of the Silvergate Exchange Network (SEN), the entity’s payment platform towards exchange houses, but that its deposit operations would remain active. On that occasion, the company clarified that it was in a process to ” reassess its business and strategies in light of the commercial and regulatory challenges” it was facing.
All about Silvergate Bank: why its closure impacts the bitcoin market
Silvergate Bank has a significant weight in the bitcoin and cryptocurrency industry, so its closure affected the market. Silvergate Bank has operated as a bank since 1988 and was founded by Silvergate Capital Corporation. This bank has been an ally in the cryptocurrency industry from 2013 to 2023.
The bitcoin (BTC) market and other cryptocurrencies have been affected at the beginning of March due to the two movements made by a heavy actor in the ecosystem: the parent company of Silvergate Bank. Market prices fell just after this company announced on March 1 that it was evaluating whether it could continue operating this year. This scene was then repeated on March 8 when he finally announced that he plans to shut down.
With this latest news hitting the industry, the bitcoin price saw a drop to $21,500, its lowest in just over three weeks. But why did this happen? Here we explain what Silvergate Bank is, what caused it to close and why it impacts the market.
Silvergate Bank was a banking ally of the cryptocurrency industry
Silvergate Bank was, until now, a bank in California, United States, which was founded in 1988 by the company Silvergate Capital Corporation. By 2013, this bank began to offer services with cryptocurrencies, which has since become the main business of its parent company, according to estimates on its website.
With its entry into the growing cryptocurrency industry at its inception, the company became a leading banking ally in the ecosystem. It stood out mainly for offering a payment network with digital currencies, which worked 24 hours and loans guaranteed in bitcoin. This happened while other banks did not want to get involved with these new financial assets.
Given this, renowned actors such as The Street Journal classified Silvergate Bank’s move as “surprising in the serious world of banks” and CNBC as “the key to the growth of the digital currency industry.”
The growth of Silvergate Capital Corporation led it to be listed on the New York Stock Exchange (NYSE) under the symbol “SI” since 2019. Also, according to the company, it came to have close to 300 employees and serve more than 750 exchanges. from cryptocurrencies like Binance, Coinbase, and Kraken , institutional investors, and software developers.
However, a series of circumstances led Silvergate Capital Corporation to announce the closure of its operations this March 2023. At the moment the company has not provided details on the reasons for this decision. However, it can be deduced that the market crash and its link to FTX are the factors that led to its collapse.
Silvergate Bank would have been affected by the bear market and FTX
In principle, it is estimated that Silvergate Capital Corporation could have been affected by the bear market that cryptocurrencies experienced last year. This is reflected in the price of its shares that fell more than 95% from the all-time high it had in November 2021, according to TradingView. It is now trading at its all-time low.
In turn, the crash of the FTX cryptocurrency exchange, which went bankrupt at the end of 2022, hit this bank. As reported by CriptoNoticias, the US justice system seized millions of dollars that the exchange in question would have stolen from its clients and had in Silvergate Bank accounts. In addition, Silvergate Capital Corporation and Silvergate Bank were sued for their alleged assistance in fraudulent activities of FTX. Faced with such a scenario, the company in January carried out a massive layoff of its employees and suspended dividends from its investors.
All this situation already indicated that the solvency of Silvergate Capital Corporation was at risk . And, indeed, this was confirmed on the first day of March when the entity delayed the public presentation of its last annual report because it needed additional time to record its financial data and assess whether it could continue operating this year.
In this statement, the company explained that they estimated to have had losses of 1,000 million dollars in the last quarter of 2022 alone. Given this, some of its clients such as Coinbase suspended the function of making payments through this bank and revealed that they had an exposure to the enterprise.
The importance of Silvergate Capital Corporation in the industry dragged the market lower following these events. Likewise, this was exacerbated this week when it announced that it had indeed decided to close its doors and liquidate the assets of Silvergate Bank in a voluntary and orderly manner.
In this context, it is vital to closely monitor how the closing of the process of Silvergate Capital Corporation and the liquidation of its bank unfold, since it could continue to impact the market.
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