Dorothy Reyes
After reports surfaced about potential difficulties with Silvergate Bank, Coinbase declared that the crypto trading platform would discontinue any payments to or from the said bank.
Coinbase announced that they were ending their partnership with Silvergate Bank due to an investigation that was occurring. In a tweet, Coinbase stated that out of caution, they would no longer accept or initiate payments between themselves and Silvergate.
The crypto exchange will enable its prime customers to carry out financial transactions using cash with Signature Bank as its banking associate.
The shares of Silvergate Bank, already put through pressure due to a delay in submitting its yearly 10-K form, decreased by a further 40% in before-trading. Because of the bankruptcy scare, JP Morgan also lowered Silvergate Capital's rating from "neutral" to "underweight".
The crypto bank has said that it has been granted an extra two weeks to finish the 10-K report for 2022, which is a mandate demanded by the United States Securities and Exchange Commission that contains information about the company's business and fiscal position.
The decision will not affect the instructions for paying in either pounds or euros.
The troubles for Silvergate Bank, more commonly referred to as the "crypto bank" due to its number of partners in the crypto landscape, have started since the FTX crypto exchange went downhill. The U.S. Department of Justice has opened up an inquiry into the bank's connection to the FTX collapse, centering around the account of Sam Bankman-Fried, the former CEO of FTX.
In a separate civil trial, Silvergate Bank and its CEO Alan Lane were charged with offering assistance and encouraging a "multi-billion dollar fraudulent scheme created by Sam Bankman-Fried (SBF)” and two of his organizations - FTX and Alameda Research.
Investigations and cancellation of deals led Silvergate to become one of the most heavily-shorted stocks in the present market. Data from the Financial Industry Regulatory Authority revealed that by the end of January, 72% of Silvergate's stocks were shorted.