Silvergate Capital Corporation, the holding company for the California-based Silvergate Bank, announced it would be shutting down the bank in a press release on Wednesday. File Photo by Dave Hunt/EPA-EFE
March 8 (UPI) -- One of the few major banks to support the cryptocurrency industry is winding down operations to begin the process of voluntary liquidation.
Silvergate Capital Corporation, the holding company for the California-based Silvergate Bank, announced it would be shutting down the bank in a press release on Wednesday.
"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 press release said.
"The bank's wind down and liquidation plan includes full repayment of all deposits. The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets."
Silvergate Bank was one of the top lenders to provide crypto-based services, taking on major clients including Coinbase and FTX, according to Fortune. About 90% of Silvergate Bank's deposits were cryptocurrency. When crypto was on an upward trajectory, the value of the bank experienced a sharp upturn, with share prices increasing 1,500-times over.
The dramatic collapse of the cryptocurrency industry dealt the deathblow to Silvergate Bank because of how closely it tied its offerings and financial success to the industry, CNBC reports. Last week it announced it would cease one of its central services, the Silvergate Exchange Network, which allowed clients 24/7 access to withdrawals.
The company also announced it would be late in filing its annual financial report to the Securities and Exchange Commission. Following the announcement, several major clients including Coinbase cut ties with Silvergate Bank, Fortune reports.
"As the impact of FTX's collapse continues to ripple outward, today we are seeing what can happen when a bank is overreliant on a risky, volatile sector like cryptocurrencies," Sen. Sherrod Brown, chair of the Senate Banking Committee, said in a statement.