Silvergate Capital (NYSE: SI) continues to suffer from the release of a Form 12b filing last night that indicated it is less than well-capitalized. The firm this morning saw several major clients abandon the banks services.
Coinbase Global (NASDAQ: COIN) was one of the first this morning to walk away from the service provider. 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 (NASDAQ: SBNY).
In making the decision, the company said it was doing so “out of an abundance of caution.” Going forward it has “de minimis corporate exposure to Silvergate.”
Circle, the firm behind the USDC stablecoin, this morning followed Coinbase’s lead, announcing that they “are in the process of unwinding certain services with them and notifying customers.” In the announcement they indicated that they maintain relationships with several such banking partners.
Paxos, a regulated blockchain infrastructure firm, also indicated that it “does not have any material exposure to Silvergate.” The firm has discontinued all SEN (Silvergate Exchange Network) transfers and wires to their Silvergate account. Outgoing payments will continue to be processed.
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That Silvergate Exchange Network appears to be coming to an end as a result of the filing made last night and the subsequent fallout. The network enables digital currency and institutional clients to send US dollars 24/7 between Silvergate accounts and other Silvergate clients.
The network, which once included major firms Coinbase, FTX, Circle, Crypto.com, Paxos, Bitstamp, Gemini, and Kraken among others, now only has three major clients remaining – Crypto.com, Kraken and Gemini.
Bitstamp also exited its role within the network this morning.
Gemini is the most recent client that has claimed to have walked away from Silvergate, stating this afternoon that they currently “have zero customer funds and zero GUSD funds held at Silvergate.” They also noted that they stopped accepting deposits and processing withdrawals through the bank to the Gemini exchange.
Crypto.com meanwhile was rumored to have exited as a client of Silvergate as well, however those reports have not been verified. Kraken has yet to comment on the matter.
Silvergate Capital last traded at $6.36 on the Nasdaq, down 53% on the day.
Information for this briefing was found via Edgar, Seeking Alpha, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
