Prolonged Crypto Winter Forces Silvergates Customers to Withdraw $8 Billion
The Californian crypto exchange bank Silvergates tumbled after customers withdrew two-thirds of the assets. The massive withdrawals forced the crypto-friendly bank to dispose the firm’s liquid assets to remain afloat.
Silvergate Operations in Mess
Silvergate is a high-tech crypto exchange bank listed on the New York Stock Exchange under the SI: NYSE symbol. The bank has been in operation for decades providing financial services to investors.
The desire to remain at the top enticed the firm to pursue the crypto space when the bulls were active. This remarkable move propelled the firm’s share price by over 1500% in 2021.
Since then, the popular California crypto bank has remained resilient to changes in the crypto world. At the beginning of 2022, Silvergate invested over $182m in the Meta project to introduce a new stablecoin.
Even though the proposed stablecoin failed at its early stage, the bank never stopped exploring new opportunities in crypto.
Silvergate Unexpected Market Spillover
In the meantime, Silvergate’s financial health is confirmed to be unstable following massive withdrawals from October last year. So far, the customer withdrawals translate to $8B, which holds two-thirds of the firm’s shares.
The unexpected move was influenced by the Federal Reserve’s speculation over the impending risks of crypto investment. In a statement issued by US regulators on January 4, investors are warned against engaging in business with “unscrupulous players” luring traders to fraudulent crypto schemes.
Will Silvergate Survive the Ongoing Crypto Winter?
The FTX implosions fueled the fall of the crypto dynasty. Major firms and investors lost a substantial amount invested in the crypto asset from last year November. Besides, Silvergate is embroiled in the FTX saga for facilitating rerouting of users’ funds to Alameda Research.
Notably, the ailing crypto bank is likely to join the list of firms battling liquidity crunch. In his filing to the SEC, chief executive Ian Lane outlined that the bank sold its assets to remain operational.
Lane also confessed that last year’s crypto winter hampered the firm’s operations. He regretted laying off 40% of his core team. Nonetheless, Lane pointed out that customer withdrawals exposed the firm to $718M in losses.
Editorial credit: T. Schneider /Shutterstock.com
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