Crypto-focused bank, Silvergate, announced yesterday that it will be winding down its operations and liquidating after suffering a major blow from FTX, who reportedly withdrew significant deposits from the bank. This decision comes after mounting woes were hurting crypto traders, and following a market meltdown that saw the collapse of crypto-friendly lender, Silvergate.
The situation has left many in the crypto community concerned, as Silvergate was one of the few banks that catered specifically to crypto companies. This move could also have wider implications for the industry, as other banks may become more hesitant to work with crypto companies due to the perceived volatility of the market.
According to sources familiar with the matter, Silvergate’s decision to wind down its operations and liquidate was not taken lightly, and the bank had been exploring various options before settling on this course of action. Despite this, many in the industry were surprised by the announcement, which came just a few days after Silvergate had reported strong financial results for 2020.
The news of Silvergate’s collapse has sent shockwaves throughout the crypto community, with many expressing concern for the future of the industry. Some have suggested that this could be a wake-up call for regulators to step in and provide greater oversight of the emerging crypto market.
Meanwhile, FTX has denied any responsibility for Silvergate’s demise, stating that it was simply following its own business interests. A spokesperson for FTX stated that “we regularly evaluate our relationships with service providers and make business decisions based on a range of factors, including risk management and regulatory compliance”.
It remains to be seen what impact Silvergate’s liquidation will have on the wider crypto industry, but many are hoping that the situation will serve as a cautionary tale for companies operating in this space. With the market still relatively new and unregulated, it is clear that there are many challenges ahead for those looking to make their mark in the world of crypto.