Cryptos extend losses as lender Silvergate Capital is shutting operations

Cryptocurrencies continued their downward momentum this afternoon after the crypto lender Silvergate Capital said on Wednesday it intends to wind down operations and voluntarily liquidate Silvergate Bank in an orderly manner and in accordance with applicable regulatory processes.

The news of its decision to liquidate dealt a fresh blow to cryptocurrency prices, pushing Bitcoin and Ethereum down to a one-month low of $21,500 and $1,530 respectively, while the smaller in-value token Solana broke below $19, and the metaverse-led Mana fell to $0.55, more than 25% from their yearly highs.

Bitcoin, 2-hour chart

California-based Silvergate offered traditional banking services to several big crypto exchanges, and it served as one of the two leading banks for crypto companies with over $11 billion in assets, along with the leading crypto-friendly New York-based Signature Bank with over $114 billion assets.

The crypto lender decided to shut down its Bank operations and proceed with a voluntary liquidation of the assets on Wednesday, adding in a statement that all deposits will be fully repaid, according to a liquidation plan.

It had suffered catastrophic losses on its portfolio of bonds when the mass flight from crypto as an asset class in the wake of FTX's collapse caused Silvergate's crypto clients to pull their funds from the bank to meet redemption requests from their own customers.

The liquidation comes less than a week after Silvergate discontinued its payments platform known as the SEN-Silvergate Exchange Network (announced on March 03, 2023), which was one of its core offerings.

The platform disconnection followed the postponement of the filing of its annual 10-K financial report for 2022 on March 01, a document required by the Securities and Exchange Commission that provides a comprehensive overview of a company’s business and financial condition.

Since the news of the late 10-K filing on March 1, Silvergate’s stock price has fallen over 60% to a record low of $4.90 on Wednesday, nearly 98% down since its all-time high of $219, hit on November 14, 2021.