when it comes end for silver door. The crypto bank announced that it was voluntarily shutting down after failing to overcome the impact of the decline of FTX, with which it has deep ties. As the organization clearly stated, the bank will fully return all deposits.
The Silvergate case is paradigmatic because its origins are not found in cryptocurrencies. company Founded in 1988 as a lending association. They were a small lending business with no more than three branches in California until the company’s CEO Alan Lane discovered Bitcoin in 2013.
Silvergate dared to transform itself as a crypto bank and the growth was huge. market value in 2021 close to $6 billion and had $11,900 million in digital assets. In just two years, that power disappeared.
Traditional business that has become a crypto giant
Unlike FTX, whose shutdown was fraught with legal troubles, one from Silvergate regular stop. They’re betting on an industry with risks and the game hasn’t gone well, but they want their downfall not to yield more results than economic ones.
Senator Elizabeth Warren sums up what this crypto bank’s decline means: “As the bank of choice for cryptocurrencies, the failure of Silvergate Bank is disappointing, but predictable.”
The failure of Silvergate Bank as the bank of choice for crypto is disappointing but predictable. I have warned of Silvergate’s risky, if not illegal, activities and identified serious due diligence failures. Customers must now be unified and regulators must take action against crypto risk.
Elizabeth Warren (@SenWarren) March 8, 2023
Silvergate shares they were down 97% from their peak two years ago. Shortly before this closing announcement, its price was $155 million. It’s incomparable to the financial giant it’s turned into, backed by giants like Vanguard Group or Blackrock.
“As the impact of the FTX crash continues to spread, we’re seeing what can happen when a bank becomes overly dependent on a volatile industry like cryptocurrency,” explains Sherrod Brown, Chairman of the Senate Banking Committee.
Silvergate had to make a loss to cover last year’s withdrawals. close to 1 billion dollars. It went from being the second-largest crypto bank in the United States in just a few months, after only Signature Bank, to see how investors had to withdraw their trust and take on debts that eventually caused him to give up.
Jason Root is a blockchain enthusiast and author at Div Bracket. He provides comprehensive coverage of the latest developments in the world of blockchain, offering readers a unique perspective on the industry and its potential for revolutionizing various industries.