Silvergate Capital Winds Down, Liquidates Its Bank

Silvergate Capital Corporation announced it would wind down operations and liquidate its financial institution, Silvergate Bank. It stated the move was voluntary and was the best path for the company.

According to the announcement, Silvergate will fully repay all customer deposits. The California-based institution will also resolve how best to keep hold of its residual assets, including its proprietary technology and tax assets. 

Silvergate Bank has found itself in a financial mess recently. The FTX collapse spillover trapped the crypto-friendly bank, leaving it in colossal debt. Despite efforts to stay afloat, the financial institution couldn’t stand the harsh realities of the crypto market.

Delay in Annual Report Spelled Doom

The liquidation notice came exactly a week after Silvergate stated it would delay sending its annual report for 2022 to the Securities and Exchange Commission (SEC). The firm noted that the delay was due to an ongoing investigation by the Department of Justice.

The uncertainty surrounding the financial institution caused investors to sever ties with the firm. Crypto firms like Coinbase and Circle announced they had ditched the bank for other partnerships.

On March 3, Silvergate announced it had halted its payment platform, Silvergate Exchange Network (SEN). It clarified that all deposit-related payments would remain accessible as the company goes through its wind-down process. It also assured customers they would be briefed if there were further changes.

Silvergate’s shares ($SI) crashed further after the liquidation announcement. The shares dropped more than 30% and traded slightly above $3. $SI has lost over 50% of its value since Coinbase announced it would part ways with the firm on March 2.

New Appointments

As part of the wind-down process, a new committee has been set up to handle the affairs of Silvergate. Centerview Partners will act as financial advisers, and Cravath, Swaine & Moore will serve as legal advisers. Strategic Risk Associates was also appointed to provide transition project management assistance.