According to a press release published this Wednesday, Silvergate Capital Corporation decided to voluntarily liquidate the crypto-friendly Silvergate bank. The bank has been under significant pressure since FTX went bankrupt in November and entered a death spiral in late February after delaying its 10-K filing indefinitely.
Silvergate Bank to Close its Doors
A press release from Wednesday revealed that Silvergate Bank’s parent company, Silvergate Capital Corporation, decided to wind down its operations and liquidate its subsidiary. The company believes that the current state of the markets makes an “orderly wind down of Bank operations and a voluntary liquidation of the Bank the best path forward”.
Silvergate also revealed that the liquidation plan entails the full repayment of all remaining deposits. Furthermore, the company is searching for the best way to “resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.”
As a result of recent developments, Silvergate announced the end of its Exchange Network—SEN—late last week. Earlier this week, it was also revealed that the company sought help from the Federal Deposit Insurance Corporation. Silvergate’s shares plummeted more than 20% in after-hours trading after the press release was published.
Why is Silvergate Getting Liquidated?
Silvergate’s downfall has been slowly picking up pace since last November when FTX, one of its major partners, filed for bankruptcy. The contagion spreading from the exchange’s collapse lead to an $8 billion bank run which, once revealed in November, caused the company’s share price to quickly drop around 40%.
The beginning of February brought more bad news as it was reported that the Department of Justice is considering a probe of Silvergate due to its extensive connections with FTX and Alameda Research. The events caused Silvergate’s shares to become the second-most shorted in the US by mid-February.
Silvergate received its mortal blow last week when an indefinite delay in its 10-K filing due to fears over its future viability, and anticipation of multiple investigations into its operations saw its shares half in less than 24 hours. Furthermore, most of the bank’s partners from the digital assets industry immediately either announced an end to the partnership or took steps to distance themselves from Silvergate.
This article originally appeared on The Tokenist
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