Silvergate Bank has just made an announcement about its operations, which is like a low blow for the entire cryptocurrency industry.
The US-based bank known for being a crypto-friendly entity has announced that it has decided to go with voluntary liquidation.
Silvergate Bank Announces Voluntary Liquidation
As per the officials at the Silvergate Bank, they have decided that they will be liquidating their business and it is a voluntary decision.
They have already started the initial process for the liquidation and have informed the relevant authorities about their consensus.
The teams have revealed that the DFPI has been notified of their decision and their proceeding with the liquidation of the business. It is the department based in California that focuses on the innovation sector as well as financial protection.
The banking solution has also made an official announcement, which confirms that the decision is final.
Reports Surfacing the Matter
Just a day back, it was reported that the Silvergate Bank was in talks with US federal officials. They were in talks with them to find out ways that would allow them to avoid shutting down their business.
Turns out, the business has decided to go for liquidation and it will be proceeding with that in the upcoming days.
Silvergate Bank Lost all of its Clients
Things had been going really well for the Silvergate Bank ever since it had started supporting the cryptocurrency firms.
The crypto market’s ups and downs were taking a toll on its business but it tried to keep it a secret. It tried managing through the declines throughout the year 2022 but things were going to unravel once the year had ended.
This is exactly what happened as things fell apart as Silvergate Bank showed hesitance in submitting the annual 10-K filing report.
This raised many concerns because the shareholders and the regulators were concerned because the bank had never done it before.
Reasons for the Delay
Upon great pressure from the shareholders and the authorities, the firm had no choice but to respond in a fair manner.
The officials at the Silvergate Bank reported that they were in the middle of responding to multiple investigations and were dealing with ongoing regulatory inquiries.
They also added that they were responding to multiple requests coming in for the purpose of audits.
Future Operations would be Impacted
When Silvergate Bank responded to the investigation requests, it was revealed they were running their operations as normal. There was nothing wrong with their business as things were usual.
The bank did make a prediction about its future operations. They claimed that their business may face an impact in the following year.
However, the cryptocurrency industry which is already heavily wounded by the previous crashes of FTX and Terraform Labs decided to cut ties with the bank.
Therefore, all of the major firms from the cryptocurrency industry started to detach themselves from Silvergate Bank. They kept exiting the bank and things turned ugly not only for Silvergate but also for the crypto investors.
Despite facing a downtrend, the crypto market and its major firms have saved themselves from a major event that could create a massive void in the crypto industry.
It is still worth mentioning that the crypto industry has taken a huge hit because many investors ended up liquidating their investments. They closed their positions in the crypto market and felt it would be the right choice to wait out Silvergate Bank’s disaster.
Even if some partners from the crypto industry had decided to stick with Silvergate Bank, they changed their minds after the platform shut down the SEN service.
Using the service, the clients could process financial transactions directly with the crypto exchanges. This turned out to be one of the final nails in the coffin of the Silvergate Bank.
The bank reported that in the fourth quarter, their losses were $1 billion and $8 billion worth of funds were withdrawn by the depositors.