Coinbase cuts ties with Silvergate as bank delays annual report filing

• Coinbase announced that it would not accept payments from or to Silvergate
• The news comes hours after LedgerX reportedly ended its relationship with the crypto bank

Coinbase, a leading U.S.-based crypto exchange, announced it would drop its alliance with Silvergate, a crypto-focused bank. This makes matters worse for the bank, which saw its value plunge in after-hours trading yesterday. The bank announced that it would be delaying its annual report filing in its SEC report yesterday. In a Twitter thread, Coinbase said,

“At Coinbase all client funds continue to be safe, accessible & available. In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.”

Moreover, Coinbase is not the only crypto-entity to drop Silvergate. LedgerX, a derivatives trading platform, has reportedly ended its ties with the crypto bank as well. According to a report by Bloomberg, the crypto trading firm informed its clients that it would use Signature Bank hereon.

Coinbase looks the other way as Silvergate hits new low

Furthermore, the crypto-exchange stated that it would use “other banking partners” to provide services to its institutional clients. Coinbase also noted that the firm “has taken proactive action to help ensure that clients experience no impact from this change.” Moreover, the crypto exchange assured that it stores clients’ cash in FDIC-insured U.S. banks, adding that large dollar deposits are held in a U.S. government money market fund. Speaking about its exposure to the crypto-centric bank, Coinbase said,

“Coinbase has de minimis corporate exposure to Silvergate.”

In its SEC filing yesterday, the bank stated it was evaluating its ability to survive as a going concern and delayed its annual report filing. Additionally, Silvergate stated that it was currently “reevaluating its businesses and strategies” given its current business and regulatory challenges. The report was initially supposed to be released on March 16, 2023. But, iit would miss this deadline over weakening capital position since February. The bank said,

“expects to record further losses related to the other-than-temporary impairment on the securities portfolio. These additional losses will negatively impact the regulatory capital ratios of the Company (…) and could result in the Company and the Bank being less than well-capitalized.”

Silvergate had taken a severe hit after the collapse of one of the biggest crypto exchanges – FTX and the overall bearish sentiment of the market. The developments led to its share value taking a free fall in the after-hours trading, hitting an all-time low. According to CNBC quotes, Silvergate is down by over 43 percent at press time, with its price down to $7.56.