Silvergate Capital, owner of the American bank specialized in crypto transactions Silvergate, has announced the cessation of the activity of the entity and a voluntary liquidation. The group ensures that it will reimburse all deposits, which amounted to about 6,000 million euros at the end of 2022.
After learning about the plan, since a buyer was not found for the business, its shares fell more than 40% in the movements prior to the opening of the market. They are worth about $2.80, far from the more than 200 of November 2021.
"In light of recent industry and regulatory developments, Silvergate believes that an orderly cessation of the bank's operations and a voluntary liquidation of the entity is the best way forward," the firm argued in a statement. Above all, the bankruptcy of FTX and the greater scrutiny that has followed by the authorities weighs heavily.
Silvergate was born in 1988 to provide loans to industrial clients, negotiating conventional services such as commercial and residential real estate loans. But in 2013 it began to transform into a bank for the digital asset industry. It began accepting deposits from institutional crypto players that few traditional financial institutions were willing to do business with. In 2018, it introduced a crypto payment platform.
The dependence on the crypto sector meant that if difficulties arose, the business could falter. The difficulties were known, reflected in the outflow of deposits or the sale of the payment business to hold the rate in the face of the heavy losses.
Silvergate lost 948.6 million dollars, about 900 million euros, in 2022, compared to the net profit of 75.5 million dollars -71.6 million euros- of the previous year, affected by the crisis in the crypto sector , greatly affected by the bankruptcy of the FTX platform, which triggered a strong outflow of deposits from the entity. Thus, in the fourth quarter of 2022, deposits fell 52% over the same time last year, from 12,555 million to the aforementioned 6,000.
A week ago, it had notified the SEC, the US regulator, that it would not be able to submit its annual report for the year 2022 on time, warning then that the firm was evaluating the viability of the business and its strategy.
