Silvergate, the data encryption bank, announced on March 3rd that it would terminate its cryptocurrency settlement data network, claiming that the suspension was "based on risk". Before that, the bank's share price had fallen by more than 59% in the past five days because of fears of a potential failure.
A disclaimer for the SilverGate website says:
Silver Gate Bank has made a risk determination, stop the Bank Gate Trading Center Internet (SEN), effective immediately. Any other savings-related services are still in operation.
On the same day, US Chief Justice Michael B. Kaplan (Michael B.Kaplan) issued a second ruling, saying that the bank must return the $9.85 million stored by BlockFi. According to documents published on BlockFi's restructuring consulting platform, the people's court ordered the bank to release assets immediately after the two companies reached an agreement in November 2022.
BlockFi was affected by the collapse of FTX last year to log on to one of the password companies, as did Silvergate. Due to the bear market of the login password stock market, the login password bank suffered a lot of capital outflows in the fourth quarter of 2022, resulting in a loss of $1 billion.
In order to mitigate the impact of the surge in withdrawals, it is reported that Silvergate borrowed 3.6 billion US dollars from the US federal home purchase loan banking system software (FHLB), which actively provides financial support to banks and borrowers through a consortium of 11 regional banks in the United States.
In a statement released by the Securities and Exchange Commission (SEC), the digital money bank described the massive loss of savings and outlined the process taken to maintain cash liquidity, including wholesale equity financing and the sale of debt securities. The data encryption bank suffered a class action lawsuit because of its relationship with FTX and Alameda Research.
Anxiety about a liquidity crisis that could lead to bankruptcy protection surged this week after the bank delayed the submission of its 10K annual financial statements. Within 24 hours of the announcement, login password companies Coinbase, Circle, Bitstamp, Galaxy Digital and Paxos announced that he would reduce his strategic partnership with the Bank to some extent. MicroStrategy and Tether joined several companies in denying any valuable openness to the bank.
According to the February short selling report, Silvergate shares were the second-largest short seller in the United States, with more than 72.5% of stocks shorted, according to Cointelegraph.
Silvergate didn't immediately respond to Cointelegraph's request for comment.
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