Silvergate Stock Drops as Crypto Clients Suspend Business with the Bank

Silvergate Stock Drops as Crypto Clients said they will Suspend Business with the Bank.

Most of crypto-friendly Silvergate Bank's (SI) industrial clients have left or are leaving the company less than a day after it said it would have to review its accounts with auditors and warned of several headwinds. The bank's share price fell more than 50% to an all-time low in intraday trading.

Silvergate already suffered last year from the bankruptcy of its key customer FTX due to reduced deposits. On Wednesday, the bank said it had sold more debt stock at a loss and was assessing whether it could remain viable. He also announced that the US Department of Justice is investigating.

On Thursday, Coinbase, Circle, Paxos, Crypto.com, Bitstamp, Cboe Digital Markets, Galaxy Digital, and Gemini announced that they were suspending Automated Clearing House (ACH) transfers and other transactions with the bank, days after the crypto derivatives provider LedgerX. reported the same. Kraken appears to be the only major crypto exchange to continue using Silvergate, as it halted some transactions with rival bank Signature (SBNY) on Wednesday.

Silvergate Bank also said in a filing Wednesday that it must repay Federal Home Loan Bank loans it took out last year.

Since December 31, 2022, several things have occurred that adversely affect the timing and uncontrollable results previously reported in the income statement, including the sale of additional investment securities over what was previously anticipated and disclosed in the income statement, primarily to repay all the outstanding advances of the Federal Home Loan Bank of San Francisco Company, the statement said.

Crypto news magazine Protos reported in January that both Silvergate and Signature applied for FHLB loans and received up to $15 billion in total.