On Wednesday, March 8, Silvergate Corporation (NYSE: SI) – the parent firm of troubled crypto-friendly bank Silvergate Capital, announced its intentions to wind down the operations as well as liquidate the bank, voluntarily.
This latest development comes as the bank has been facing major operational headwinds following the collapse of the crypto exchange FTX. In its press release, Silvergate Corp. stated that the winding down of operations shall occur in accordance with the applicable regulatory processes. The parent group added:
“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward. The Bank’s wind down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.”
Last week itself, the Group made a decision itself to discontinue the Silvergate Exchange Network (SEN). Amid the current winding down, the bank said that its deposit-related services shall remain operational.
Silvergate Bank and Regulators, SI Stock Crash
Ahead of announcing its decision to wind down operations, there were reports that Silvergate is working with FDIC officials to get itself out of this financial turmoil. However, the recent announcement has drawn comments from regulators. Senator Sherrod Brown, chair of the Senate Banking, Housing, and Urban Affairs Committee, said:
“Today we are seeing what can happen when a bank is over-reliant on a risky, volatile sector like cryptocurrencies. When banks get involved with crypto, it spreads risk across the financial system and it will be taxpayers and consumers who pay the price.”
Senator Elizabeth Warren, a major Wall Street critic also warned of the dangers posed to the financial system. She also stated that regulators should step up measures to address crypto risks.
As the bank of choice for crypto, Silvergate Bank’s failure is disappointing, but predictable. I warned of Silvergate’s risky, if not illegal, activity—and identified severe due diligence failures. Now, customers must be made whole & regulators should step up against crypto risk.
— Elizabeth Warren (@SenWarren) March 8, 2023
In the aftermarket hours, the stock price of Silvergate Capital (NYSE: SI) tanked by another 50% ending at $2.76.
Main content of the article:
Silvergate Corporation, the parent company of crypto-friendly bank Silvergate Capital, announced that it was winding down operations and voluntarily liquidating the bank following major operational difficulties prompted by the collapse of crypto exchange FTX. The company said that the winding down of operations would occur in line with regulatory processes. Its liquidation plan includes full repayment of all deposits. Last week, Silvergate decided to discontinue the Silvergate Exchange Network, while its deposit-related services remain operational. The development however, prompted concern from regulators such as Senator Elizabeth Warren, who warned of the dangers posed to the financial system, adding that regulators should step up measures to address crypto risks.
