Silvergate Capital on Verge of Collapse
One of the most popular US banks for cryptocurrency transactions, Silvergate Capital, is in danger of collapse. The firm is examining its position to decide whether it can continue its operations.
On 1 March, the bank reported to the US financial watchdog, the Securities and Exchange Commission (SEC), that it would not file its annual activities report on the deadline. It also reported to the SEC that it is deliberating its options to survive the crisis.
Silvergate facing bankruptcy due to FTX contagion
Silvergate Capital is a bank that deals in crypto lending. It has become the first conventional finance house affected by the FTX contagion. Reportedly, it lent almost all its funds to the exchanges. Due to this, when the FTX crypto exchange crashed, the California-based finance company suffered severe losses.
Meanwhile, the collapse of Sam Bankman-Fried's firm has affected several crypto-lending firms since November 2022. Some of the most prominent names are BlockFi, Genesis Global, and Gemini Exchange.
In addition, many prominent lending partners are pulling out after the news of the bank's potential bankruptcy. The firms that have withdrawn include big names like Coinbase Global, Galaxy Digital Holdings, Crypto.com, and Paxos Trust. The company will also have to deal with this loss of business.
Silvergate shares plunged
After the bank reported to the SEC about its financial situation, its share value plummeted. On Thursday, the firm's share value dropped by more than 55%. The overall stock price in the year has decreased by 67%.
Furthermore, Silvergate has experienced losses of more than $1 billion in the past three months. Although many other firms also saw significant losses, Silvergate’s collapse could leave a lasting effect on the market. The main reason is that the firm is a traditional bank, which could likely shake investors' trust in the crypto market.
Author: Wasay Ali
Wasay Ali is a versatile professional writer with global experience and a background in mechanical engineering and social science. He is adept at crafting news and informational content for the crypto space and has experience writing for other niches. He is a professional SEO content writer who has worked with several digital marketing agencies and clients in the US, UK, Pakistan, and Europe. He is a dedicated volunteer and enjoys reading, writing, poetry, and going to the gym. He is an INFJ-A personality type dedicated to positively impacting the world. Wasay has a passion for writing as it allows him to express his creativity, share his knowledge, and connect with people worldwide.