Silvergate Capital Shuts Down Silvergate Bank, Shares Crash Nearly 50%
In what seems to have been an inevitable event, Silvergate Capital (NYSE: SI) announced on Wednesday that it is liquidating Silvergate Bank “in an orderly manner and in accordance with applicable regulatory processes.”
“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 company said in its statement.
Winding down the bank’s operations includes full repayment of deposits, the firm noted. It added that is also thinking about how to effectively resolve claims and protect the residual value of its assets, which include proprietary technology and tax assets.
The firm’s shares fell 5.8% on the day before falling nearly 50% down in the after-hours trading before tapering to around 34% decline. The company already lost 72% of its valuation just this year.
The move comes after Silvergate recently sounded the alarm bells for the bank being under capitalized, adding that pending regulatory probes will “affect its ability to continue as a going concern in the 12 months.”
Afterwards, Coinbase dropped the bank as its service provider, with many other firms following suit. The crypto exchange issued a letter to its Prime clients indicating that it would be halting the use of Silvergate Bank immediately, and transitioning to Signature Bank.
Silvergate also noted its earlier decision to discontinue the Silvergate Exchange Network. The firm clarified that while it is liquidating the bank, all other deposit-related services “remain operational as the company works through the wind down process.”
Silvergate Capital last traded at $4.91 on the NYSE.
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