Silvergate plans to wind down bank ops, liquidate after crypto metldown

business-standard.com:

Silvergate Capital Corp. plans to wind down operations and liquidate its bank after the crypto industry’s meltdown sapped the company’s financial strength. The shares plunged more than 50%.

“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward,” the company said in a statement. “The bank’s wind-down and liquidation plan includes full repayment of all deposits.”

Silvergate collapsed amid scrutiny from regulators and a criminal investigation by the Justice Department’s fraud unit into dealings with fallen crypto giants FTX and Alameda Research. Though no wrongdoing was asserted, Silvergate’s woes deepened as the bank sold off assets at a loss and shut its flagship payments network, which it called “the heart” of its group of services for crypto clients.

“Today we are seeing what can happen when a bank is over-reliant on a risky, volatile sector like cryptocurrencies,” Senator Sherrod Brown, chair of the Senate Banking, Housing, and Urban Affairs Committee, said in a statement. “When banks get involved with crypto, it spreads risk across the financial system and it will be taxpayers and consumers who pay the price.”

The company told investors March 1 that it was reviewing whether it would be able to stay in business. It’s the first bank failure in the US since 2020, according to the FDIC’s website, which listed four during the first year of the pandemic.

Silvergate’s shares fell as low as $2.30 in extended New York trading after the announcement. The stock topped $220 in November 2021.

The firm’s collapse could “put even more pressure on banks to demonstrate that their dealings with crypto