Silvergate Bank has gone into liquidation, raising further concerns about rising volatility in the crypto sector.
Earlier this month, Silvergate warned that it would miss the deadline to file its annual report and raised questions about its ability to survive as a going concern. The bank in January posted a $1 billion loss for the fourth quarter related to the collapse of cryptocurrency exchange FTX.
In a statement, the Bank says: "In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward. The Bank’s wind down and liquidation plan includes full repayment of all deposits. 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."
Silvergate's shares have plunged in recent months as major clients pulled their accounts in the face of deepening losses and regulatory inquiries by the FDIC and Department of Justice over its ties to FTX.
In a statement, Senate Banking Committee Chairman Sherrod Brown comments: "As the impact of FTX’s collapse continues to ripple outward, today we are seeing what can happen when a bank is overreliant on a risky, volatile sector like cryptocurrencies. I’ve been concerned 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. That’s why I am continuing to work with my colleagues in Congress and financial regulators to establish strong safeguards for our financial system from the risks of crypto.”