Silvergate shutting down operations and liquidating bank

silvergate capital announced Wednesday that it will scale back operations and liquidate Silvergate Bank. The company’s shares are down more than 25% in after-hours trading.

Silvergate is one of two major crypto banking giants. The other is a New York-based signatory bank with total assets he over $114 billion. Silvergate’s assets are just over $11 billion.

“In light of recent industry and regulatory developments, Silvergate believes an orderly winddown of banking operations and voluntary liquidation of banks is the best course of action,” the company said in a statement.

All deposits will be fully repaid, according to the liquidation plan shared Wednesday afternoon. However, it is unclear how the crypto-friendly bank plans to settle charges against its business.

Centerview Partners is acting as financial advisor to Silvergate, with Cravath, Swaine & Moore providing legal services.

After the market close on March 3, Silvergate suspended its payment platform known as the Silvergate Exchange Network (SEN). It was considered one of the company’s core services. As part of the liquidation announcement, Silvergate said it would permanently discontinue its payments network, but clarified that all other deposit-related services would continue to operate while the company worked through the winding-down process.More changes If there is, you will be notified.

The announcement comes a week after Silvergate said it would delay filing its 2022 annual 10-K while it sorts out the “feasibility” of the business. The company said the delay in filing the 10-K was partially due to an impending regulatory crackdown, including an investigation already underway by the Department of Justice.

crypto companies like coin base And Galaxy Digital hastily cut ties with Silvergate last week after warning that it wasn’t sure it would be able to continue doing business.

Silvergate has been struggling for months. FTX, now a bankrupt and infamous cryptocurrency exchange, was both a Silvergate customer and a big supporter.

In addition to lay off 40% of the workforcethe crypto-banking giant Reported net loss of approximately $1 billion Customer deposits plummeted 68% to $3.8 billion in the fourth quarter following the bank run late last year.

To cover the exit, Silvergate had to sell $5.2 billion in bonds.

it also went Adding $4.3 billion to the Federal Home Loan BankThat loan caught the attention of lawmakers like Senator Elizabeth Warren, D-Mass. “Introduced more cryptocurrency market risk to the traditional banking system.”

Investment firms Citadel Securities and BlackRock recently acquired a major stake in Silvergate — 5.5% and 7%.