Six crypto firms join Coinbase in ditching troubled Silvergate Bank
- Circle, Paxos, Bitstamp, Gemini, Crypto.com and Galaxy Digital have started to bid goodbye to troubled crypto-focused bank
- Earlier today, Coinbase announced that it would stop processing payments to Silvergate Bank
The woes of Silvergate Bank, a crypto-focused financial services provider, seem to be increasing with each passing hour. The bank has been dropped by six other crypto firms after Coinbase cut its alliance with the bank. Paxos Trust Company, Gemini, and Galaxy Digital Holdings Limited have stopped accepting payments from Silvergate.
Meanwhile, Circle – the issuer of stablecoin USDC – announced that it was in the process of ending certain services with the bank. Bitstamp and Crypto.com have temporarily disabled services to Silvergate Bank.
Crypto firms exodus from Silvergate Bank
In a statement released on Twitter, Paxos stated that the firm does not have “any material exposure to Silvergate”. And, it further stated that the firm has stopped accepting all Silvergate Exchange Network (SEN) transfers. This includes wire transfers via Silvergate. However, the outgoing payments will continue to operate. The firm also stated,
“Paxos’ priority has always been the protection of its customers’ funds and assets, and as such we leverage a diverse network of banking partners.”
Notably, Galaxy Digital’s statement resonated with the statement released by Paxos. This crypto entity, too, stated that it would discontinue accepting/ transferring payments to the bank. The firm also stated that it had “no material exposure” to the troubled crypto bank, adding that this was a cautious move. It said,
“This step was part of our vigorous risk-management process to ensure client and firm assets are secure. Galaxy remains committed to helping clients navigate the ever-changing market environment.”
On one hand, USDC issuer – Circle stated that it was in the process of ending certain services with Silvergate given the concerns surrounding the bank. The stablecoin issuer also stated that it has relationships with multiple banking service providers, indicating that it does not solely rely on one bank.
Crypto.com and Bitstamp, on the other hand, stated that they have temporarily stopped SEN services for their users and withdrawn USD wire support. Another leading crypto-exchange – Gemini – also released a statement regarding Silvergate Bank. It said on Twitter,
“We are actively monitoring the situation with Silvergate Bank. We currently have zero customer funds and zero GUSD funds held at Silvergate. 2/ In addition, we have stopped accepting customer deposits / processing withdrawals via ACH and wire transfers through Silvergate to the @Gemini exchange.”
With this development, Silvergate Bank bid seven crypto entities goodbye today. These firms ceased business with the bank a day after it stated that it was reevaluating its businesses and strategies. Moreover, Silvergate Bank stated that it was evaluating its ability to survive as a going concern in its recent SEC filing, adding that its annual report would be delayed.
All this has resulted in Silvergate Bank’s (SI) share price dropping to an all-time low. According to CNBC quotes, SI was trading at 6.82 at press time and had plummeted by nearly 50%.