Silvergate Corporation, the parent firm of Silvergate Bank, has announced that it plans to wind down operations and liquidate the bank voluntarily. This decision follows the collapse of the crypto exchange FTX, which caused major operational headwinds for Silvergate Bank. The bank stated that the winding down of operations will occur in accordance with regulatory processes and will include full repayment of all deposits.
Silvergate Capital’s Stock Plummets Amid Concerns Over Cryptocurrency’s Risks
The company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets. Senator Sherrod Brown, chair of the Senate Banking, Housing, and Urban Affairs Committee, and Senator Elizabeth Warren have both warned of the dangers posed to the financial system when banks become over-reliant on risky, volatile sectors like cryptocurrencies. In the aftermarket hours, the stock price of Silvergate Capital tanked by another 50%, ending at $2.76.
The Winding Down of Silvergate Bank
Silvergate Bank, a crypto-friendly bank, has faced significant challenges following the collapse of FTX. The bank has been working with FDIC officials to get itself out of financial turmoil. However, the recent announcement of its plan to wind down operations and liquidate the bank has drawn comments from regulators.
Silvergate Bank’s decision to wind down operations comes as it faces challenges associated with operating in a volatile and risky sector like cryptocurrencies. The bank has been heavily involved in the crypto industry, and its winding down is a significant development for the crypto sector.
Silvergate Bank’s liquidation plan includes full repayment of all deposits. The bank will also work to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.
Regulators Warn of the Dangers of Crypto Risks
Senator Sherrod Brown and Senator Elizabeth Warren have both warned of the dangers posed to the financial system by banks becoming over-reliant on risky and volatile sectors like cryptocurrencies. They are calling for regulators to step up measures to address crypto risks.
Senator Brown, chair of the Senate Banking, Housing, and Urban Affairs Committee, stated that “when banks get involved with crypto, it spreads risk across the financial system, and it will be taxpayers and consumers who pay the price.” He warns that the financial system is at risk if banks become too involved in the crypto sector.
Senator Warren, a major Wall Street critic, also warned of the dangers posed to the financial system by the involvement of banks in the crypto sector. She called for regulators to step up measures to address crypto risks, stating that “we need a regulatory framework that is clear and consistent for all financial institutions operating in the crypto space.”
Stock Price of Silvergate Capital Tanks
In the aftermarket hours, the stock price of Silvergate Capital tanked by another 50%, ending at $2.76. This significant drop in the stock price of Silvergate Capital reflects the concerns of investors about the winding down of operations and the liquidation of the bank.
Investors are also concerned about the risks associated with operating in the crypto sector. The involvement of banks in the crypto sector is still relatively new, and there are many risks associated with operating in this sector. The collapse of FTX and the subsequent challenges faced by Silvergate Bank has highlighted the risks associated with the crypto sector.
Conclusion
The announcement by Silvergate Corporation of its plan to wind down operations and liquidate the bank is a significant development for the crypto sector. The collapse of FTX and the subsequent challenges faced by Silvergate Bank have highlighted the risks associated with operating in the crypto sector.
Source: https://www.cryptopolitan.com/silvergate-to-liquidate-wind-down-operations/