In response to an ongoing inquiry, cryptocurrency exchange Coinbase stated that it had ended its relationship with Silvergate Bank as its U.S. dollar banking partner. Coinbase stated in a tweet: “In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.“
The cryptocurrency exchange will work with its other banking partner, Signature Bank, to facilitate institutional client cash transactions for its top clients.
Due to a delay in releasing its annual 10-K report, Silvergate Bank’s equities, which were already under pressure, fell further 40% in pre-market trading. JP Morgan also lowered Silvergate Capital from “neutral” to “underweight” in response to the potential bankruptcy. The U.S. Securities and Exchange Commission mandates a 10-K report, which offers a thorough review of a company’s operations and financial standing. The cryptocurrency bank has previously stated that it will require an additional two weeks to finish the report for the fiscal year 2022.
Traces of Silvergate Bank in FTX Collapse
Moreover, the failure of the FTX cryptocurrency exchange marked the beginning of problems for the fintech bank. Due to its numerous cryptocurrency partners, Silvergate Bank also goes by the name “crypto bank,” and the U.S. Department of Justice is currently looking into its role in the FTX collapse. Sam Bankman-Fried, the former CEO of FTX, has an account with the bank that is the focus of the investigation.
In another civil lawsuit, the court charged Sam Bankman-Fried (SBF) and two of his companies, FTX and Alameda Research, with “aiding and abetting” a “multibillion-dollar fraudulent conspiracy.” Silvergate Bank and its CEO Alan Lane were named as participants. One of the most shorted companies in the present market is Silvergate due to the ongoing investigations and the dissolution of partnerships. The Financial Industry Regulatory Authority reports that at the end of January, Silvergate Capital stock has plummeted by 72%.
Read more topical financial news here.
