- Silvergate Bank announces liquidation due to recent industry and regulatory developments.
- Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital sever relations with the bank over FTX collapse inquiry.
- Liquidation sparks discussion on responsible risk management in the volatile crypto industry.
The crypto community was taken by surprise when Silvergate Capital Corporation, the parent company of Silvergate Bank, announced on March 8 its decision to cease operations and liquidate the bank. This move was based on recent industry and regulatory developments, as per the corporation’s statement. The liquidation plan of Silvergate Bank includes the return of all deposits in full, which was reassuring for the bank’s customers.
However, the announcement led to several big names in the crypto industry, including Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital, among others, stating that they would sever relations with the bank. This decision came after an inquiry into Silvergate’s possible participation in the FTX collapse, which raised red flags for these companies.
The bank itself had cited a risk-based rationale for shutting down its exchange network on March 3. This decision was based on the bank’s cautious approach to managing risk in the volatile crypto industry, and the bank believed that it was the best course of action at the time.
The news of Silvergate Bank’s liquidation has sparked widespread discussion in the crypto community. Legislators, crypto experts, business executives, and commenters alike have all weighed in on the matter. Many are concerned about the state of the crypto industry and the impact this could have on the financial system, with several United States senators cautioning against the dangers of this volatile sector.
While the decision to liquidate Silvergate Bank has caused some turbulence in the crypto industry, it also highlights the importance of responsible risk management in this field. As the industry continues to evolve, it is crucial that companies and institutions take a measured and responsible approach to managing risk and ensuring the safety and security of their customer’s assets.
