The Bank Slate


Silvergate shuts down crypto exchange network

Silvergate Capital in La Jolla, Calif., has shut down its cryptocurrency payments network after months of implosions by digital assets clients.

The $11.4 billion-asset company said in a brief statement on its website that it had made the “risk-based decision to discontinue the Silvergate Exchange Network (SEN).

Silvergate said that all of its other deposit-related services remain operational.

The network had offered round-the-clock transfers between crypto exchanges and investors.

The announcement followed a regulatory filing where Silvergate warned that recent securities sales would hurt its capital levels and could lead to the company and its bank becoming “less than well-capitalized.”

The company said in a filing seeking more time to file its annual report that it sold securities at a loss in January and February “primarily to repay in full the company’s outstanding advances from the Federal Home Loan Bank of San Francisco.”

Silvergate said it is evaluating how the securities sales, and associated losses, could impact “its ability to continue as a going concern,” adding that it is reevaluating its businesses and strategies.

“The company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the company,” the filing said. “The company’s independent registered public accounting firm is also requesting detailed information relating to such matters and the company is responding to such requests.”

The company lost $948.7 million in the fourth quarter after it sold securities to offset a massive outflow of deposits tied to the crypto industry. It also borrowed from the FHLB system, laid off 40% of its staff and eventually suspended paying dividends on a series of preferred stock.

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