Bitcoin traded lower after Silvergate Capital announced it would be shutting down operations and liquidating Silvergate Bank on its own initiative.
“There has been some level of price action since Silvergate’s liquidation announcement, but key industry-wide metrics like spot trading volume, futures open interest (OI), and DeFi total value locked (TVL) have not moved much,” said Zhong Yang Chan, Head of Research at CoinGecko. “Generally, markets have been subdued while awaiting further inflation rate data.”
Chan told FOX Business that CoinGecko, the largest independent aggregator of cryptocurrencies in the world, does not expect any ripple effects, since the majority of its customers are likely already moving on to other banks, or having alternatives lined up.
Silvergate began raising questions about its ability to remain in business last week after reporting $1 billion in losses for the fourth quarter and delaying an annual report to the SEC.
Digital assets customers deposits totaled $7.3 billion in Q4-2022, down from $12.0 billion in Q3-2022.
On January 5, Silvergate laid off 200 employees and said that the total deposits from digital asset customers had declined to $3.8 billion as of Dec. 31, 2022, down from $11.9 billion as of Sept. 30, 2022.
On Jan 27, the bank suspended dividend payments for certain preferred shares in order to conserve capital, and on Jan. 31, US Senators asked Silvergate to elaborate on its risk management practices and handling of FTX, the failed exchange.
On Feb. 2, federal prosecutors in Washington began investigating the bank and its dealings with the bankrupt crypto exchanges FTX and Alameda Research.
Coinbase Global Inc. and Galaxy Digital dropped Silvergate as their bank partners a month later. Silvergate Capital was founded in 1988, and began dipping its toes into cryptocurrency in 2013, before moving the bulk of their transactions into digital assets over the past few years.
