The recent fallout from crypto bank Silvergate Capital has sent ripple effects through the cryptocurrency market, causing many cryptocurrencies to slide in value. After submitting a filing to the Securities and Exchange Commission (SEC) on Wednesday, stating the need to delay its annual report filing, Silvergate has been assessing the impact of several events on its business, including the bankruptcy of one of its largest clients, FTX. As a result, Silvergate saw nearly 70% of its digital-asset-related deposits leave the bank in Q4 of 2022, prompting a bank run, and leading the bank to assess its “ability to continue as a going concern.”

As major clients such as Coinbase have announced they will stop using the bank, Silvergate’s stock has fallen by a significant 58% and is down an additional 11% on Friday. While the largest cryptocurrencies like Bitcoin and Ethereum have held up decently in response to the news, investors seem more worried on Friday, with concerns that the ongoing issues could impact global crypto liquidity.

The services provided by Silvergate are critical in helping exchanges, traders, and others easily change dollars to crypto and vice versa, making the news of industrywide interest. While it is still believed that the largest cryptocurrencies will be around for a long time and that people will continue to swap them for fiat currencies, this event highlights the risks associated with certain crypto activities and the need for caution in the industry.

Leave a Reply

Your email address will not be published. Required fields are marked *