CryptoCurrency

Silvergate Financial institution Proclaims Voluntary Liquidation amid Troubles

Silvergate Capital Company Commences the Process of Liquidation In the midst of regulatory inquiries
The founder of the cryptocurrency-friendly Silvergate Financial institution, Silvergate Capital Company (Nasdaq: SI), has made the decision to shut down its banking activities and voluntarily liquidate assets in a “orderly manner.” The financial institution, which was introduced late on Wednesday, has already brought on Centerview Companions LLC as the financial advisor for the liquidation process, Centerview Companions LLC as an authorised recommendation, and Strategic Threat Associates as assistance with challenge administration. An orderly wind-down of financial institution operations and a voluntary dissolution of the financial institution, in light of current trade and regulatory developments, is Silvergate’s belief regarding the best course of action, according to the official announcement.
The financial institution made clear that as part of its wind-down and liquidation process, it intends to refund all deposits. “The Firm may be considering the best course of action to settle disputes and safeguard the remaining value of its assets, including its tax property and proprietary knowledge.”
Since October 2020, when Almena State Financial institution failed and shut down in response to the Federal Deposit Insurance coverage Company (FIDC), Silvergate’s collapse has been the main failure of a banking establishment. However, as Silvergate chose a voluntary liquidation rather a FIDC receivership, it will not appear on the list of failing banks maintained by the Financial Industry Regulatory Commission.
Founded in 1988, Silvergate Financial Institution gained notoriety in 2013 when it started providing financial services to companies involved in bitcoin. The financial institution disclosed more than 500 cryptocurrency buyers in its November 2018 preliminary public offering (IPO) filing, and this number increased to more than 750 after it was listed on the New York Inventory Trade in 2019. The banking institution went so far as to introduce Silvergate Trade Community (SEN), an internal mechanism for settling transactions pertaining to cryptocurrencies that has since been discontinued.
Strong ties between Silvergate and the now-defunct cryptocurrency trading FTX prompted regulatory inquiries into the bank. Several cryptocurrency companies, including Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital, terminated their cooperation with Silvergate in response to the financial institution’s regulatory issues.
Press secretary for the US White House Karine Jean-Pierre affirmed that President Joe Biden is pushing Congress to act on the problems related to cryptocurrencies. Congressmen in the US are blaming the bank’s collapse on the risk involved in trading cryptocurrencies. Influencers and lobbyists in the cryptocurrency industry are accusing fractional-reserve banking of being the reason behind Silvergate’s demise, citing the bank’s holding of more demand-driven deposits than cash on hand.

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