- Binance CEO, Changpeng Zhao, assures their community that Binance has no exposure to Silvergate Bank.
- Silvergate announced that it was winding down its business and voluntarily liquidating amidst the crisis facing the crypto industry.
- The bank also stated that it would fully return all customer deposits as it shuts down in an orderly manner.
Binance, the biggest cryptocurrency exchange in the world, stated that it has no exposure to Silvergate Capital to relieve the fears of customers alarmed by the bank’s collapse on Wednesday. Soon after Silvergate announced it was liquidating, Binance CEO Changpeng Zhao tweeted, saying, “Binance does not have asset losses at Silvergate. Funds are safe.”
Silvergate officially announced that it was winding down operations and liquidating voluntarily due to the losses it has continued to incur in the aftermath of the FTX collapse. The crypto-focused bank said that a voluntary liquidation of the bank was “the best path forward” in light of “recent industry and regulatory developments.”
The bank intends to repay all customer deposits in full as part of its liquidation process. Additionally, the bank has onboarded Centerview Partners, Cravath, Swaine & Moore LLP, and Strategic Risk Associates to aid in a seamless liquidation process by offering financial, legal, and project management advice.
Aside from Binance, several other crypto firms, including Coinbase, reassured their communities that the Silvergate shutdown would not affect them and their operations. Coinbase tweeted saying:
” We’re sorry to see Silvergate make the tough decision to wind down their operations. They were a partner & contributors to the growth of the crypto economy. Coinbase has no client or corporate cash at Silvergate. Client funds continue to be safe, accessible & available.”
Silvergate is on its Way Down
Silvergate’s collapse was speculated the day it said it would delay filing its annual 10-K report citing losses and investigations by the Department of Justice (DoJ) and the SEC. This led to a drastic downward trend in the prices of the bank’s stocks.
The bank incurred massive losses of over $1 billion in the last quarter of 2022 as it suffered a bank run amidst the FTX collapse. This resulted in the bank selling additional assets worth more than $5.2 billion to cover customer withdrawals.
All these culminated in clients, mostly crypto firms, transferring their businesses to other banks, such as Signature bank, fearing an impending crisis since the bank had stated that the losses would lead to it being “less than well-capitalized.” Big clients such as Kraken, Coinbase, Circle, Paxos, Gemini, and many other firms exited from the bank in days, citing concerns with the bank’s continuity.
A few days before this announcement of its shutdown, the California-based bank also announced its decision to discontinue the Silvergate Exchange Network (SEN), terming it a risk-based decision. The bank placed a disclaimer on its official website stating:
“Effective immediately, Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational.”
