Silvergate, once known as the crypto industry’s go-to bank, saw a mass exodus of some of its most important partners from within the sector. The company’s shares reflected the day’s events, as well as last night’s postponement of the K-10 filing, by dropping 57.69%.

Silvergate’s Crypto Clients Jump Ship As Bank Delays 10-K, Warns of Troubles to Come

While Silvergate has been under significant pressure since the downfall of FTX, things have taken a drastic turn for the worse since Wednesday afternoon. Early on Thursday, it was revealed that Coinbase made the decision to switch from its long-standing banking partner to Signature “In light of recent developments & out of an abundance of caution”.

The rest of the day didn’t go much better for the crypto-friendly bank as it saw a veritable exodus throughout the day. Throughout the day, Circle, Paxos, Galaxy Digital, and CBOE followed Coinbase’s example and announced the end of their partnership with Silvergate. The company’s shares reacted violently and declined 57.69% between the market’s close on Wednesday, and the end of Thursday’s trading day. The decline, albeit less sharp, continued into the after-hours.

Multiple other companies also took the opportunity to distance themselves from the seemingly doomed bank. Gemini, for example, stated it has zero GUSD and zero customer funds held with the ailing company. It also stated it had suspended customer withdrawals, deposits, and wire transfers going through Silvergate to the exchange.

For its part, Michael Saylor’s MicroStrategy stated it only has a loan from Silvergate due in the first quarter of 2025 and added their Bitcoin isn’t custodied with the bank. Bitstamp and Crypto.com also distanced themselves from the bank. Thursday’s dramatic events had no major impact on the price of major cryptocurrencies, nor of the major crypto-related stocks apart from an early drop in Coinbase’s shares which has since been mostly negated.

Why is Silvergate Taking a Nose Dive?

While Silvergate was closely watched by many a wary eye since Sam Bankman-Fried’s exchange went bankrupt last November, the bank’s troubles started showing in earnest in early 2023. Soon after the new year, a bank run worth more than $8 billion that left the company with just over $3 billion in deposits was revealed.

Not long after, rumors that Silvergate is facing a DoJ investigation started emerging—rumors seemingly confirmed when the company revealed a delay in its 10-K filing, in part due to a likely DoJ, regulator, and Congressional investigation. By mid-February, the crypto-friendly bank became the second-most shorted stock in the US.

Silvergate’s Q4 earnings report was equally troubling as it revealed a $1 billion loss and the company’s most recent filing revealed it is reconsidering its future viability. While Silvergate has so far taken the limelight, the events of 2022’s “crypto winter” caused other important crypto-friendly banks to reconsider their approach to digital assets. Signature Bank, for example, notified Binance in late January that it will no longer be processing exchange users’ transfers worth less than $100,000 and signaled already in late 2022 that it is actively seeking to reduce its exposure to cryptocurrencies.

This article originally appeared on The Tokenist

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