Businesses in the digital asset sector are keeping their distance from Silvergate after the crypto-friendly bank postponed submitting its annual 10-K report to the Securities and Exchange Commission (SEC).
Tether, Coinbase, Paxos, Galaxy Digital, Gemini, BitStamp, Crypto.com, and Circle are a few of the popular crypto firms that severed connections with Silvergate. However, some of them said they didn’t have exposure to it in the first place.
Notably, Gemini said on Thursday that it no longer accepts withdrawal and deposit requests made through the California-based bank via ACH or wire transfer. It indicated that it is “actively monitoring the situation” and has no customers or GUSD cash kept with Silvergate.
2/ In addition, we have stopped accepting customer deposits / processing withdrawals via ACH and wire transfers through Silvergate to the @Gemini exchange.
— Gemini (@Gemini) March 2, 2023
MicroStrategy, which has more than 130,000 bitcoins on hand, has affirmed that Silvergate is not the custodian of their BTC collateral. A bankruptcy or insolvency event wouldn’t “accelerate” the loan repayment, the Michael Saylor-founded company noted, adding it wouldn’t be due to return a loan from Silvergate until Q1 2025.
We have a loan from Silvergate not due until Q1 ‘25. There are mkt concerns re SI’s fin. condition. For anyone wondering, the loan wouldn’t accelerate b/c of SI insolvency or bankruptcy. Our BTC collateral isn’t custodied w/ SI & we have no other financial relationship w/ SI.
— MicroStrategy (@MicroStrategy) March 2, 2023
More Crypto Companies Ditch Silvergate
Similar declarations were also made by Coinbase, the largest cryptocurrency exchange in the United States, which noted that due to recent events and extreme caution, it is no longer accepting or initiating payments to or from Silvergate.
It said, “Coinbase has de minimis corporate exposure to Silvergate.”
Paxos also weighed in yesterday, arguing that it has no significant exposure to the crypto-friendly bank. The security of its customers’ money and assets has always been a top priority for Paxos, according to a tweet from the company, and as a result, they work with a wide range of financial partners.
Statement from Paxos on Silvergate Bank: Paxos does not have any material exposure to Silvergate. Paxos’ priority has always been the protection of its customers’ funds and assets, and as such we leverage a diverse network of banking partners.
— Paxos (@PaxosGlobal) March 2, 2023
Silvergate recorded a net loss of $1 billion in Q4 2022 as a result of the unexpected collapse of FTX in November, which raised questions about the company’s possible financial difficulties.
However, the bank disclosed that it will submit a late 10-K financial report and reveal any open regulatory inquiries. That announcement resulted in a rapid decline in the stock’s value. Share prices fell, even more, today as more companies severed connections with and ditched Silvergate.
The series of partnership breakups began after Silvergate declared that it might not survive the turbulence since the extreme asset sale would deplete its capital. As a result, the bank has also been unable to pay off loans that are coming due.
