Silvergate Bank has discontinued its cryptocurrency payment network.The decision to close the Silvergate Exchange Network follows the withdrawal of banking relationships by several major cryptocurrency companies including Coinbase, Gemini Paxos, and Circle, and follows the withdrawal of banking relationships by several major cryptocurrency companies, including Coinbase, Gemini, Paxos, and Circle.
Silvergate Discontinues Crypto Payment Network
Silvergate Bank announced on Friday that its cryptocurrency payment network, Silvergate Exchange Network (SEN), has been terminated. According to a notice posted on the bank’s crypto-focused website.
Silvergate Bank is pleased to announce its decision to discontinue the Silvergate Exchange Network (SEN) based on risk. All other deposit related services will continue to operate.
SEN is Silvergate’s proprietary network that allows the bank’s institutional and digital currency customers to transfer U.S. dollars between their Silvergate accounts and those of other Silvergate customers 24/7.
The collapse of crypto exchange FTX has raised concerns about Silvergate’s financial stability and future prospects. The bank claimed that as of September 20, 2022, FTX had less than 10% of the $11.9 billion in total deposits from all digital asset customers. Nevertheless, the bank is reportedly underinvestigationby the U.S. Department of Justice (DOJ) for accounts related to disgraced FTX co-founder Sam Bankman Freed (SBF).
On Wednesday, Silvergate notified the SEC that it is unable to file its annual report with the regulator for the fiscal year ended December 31.” . within the prescribed time period without undue effort or expense for the reasons explained below.” The crypto-focused bank also revealed that it sold additional debt securities at a loss this year, raising questions about its ability to operate as a going concern. The filing further stated that the bank’s continued losses could leave it “undercapitalized.” Silvergate added
it is currently reviewing its business and strategy in light of the business and regulatory challenges it faces.
After Silvergate raised concerns about its business, crypto-focused companies such as Coinbase Global, Galaxy Digital, Paxos, Circle, Cboe’s digital asset exchange, Bitstamp, Gemini have suspended their banking partnerships with Silvergate.
Silvergate (NYSE: SI) stock hit an all-time low on Thursday, plunging more than 97% from its November 2021 peak. Last month, Silvergate became the most shorted stock in the U.S., with the bank incurring a $1 billion loss in the fourth quarter of last year.
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