Crypto.com, a Singapore-based exchange, announced that it will decline funds transferred to and from its platform using Silvergate as a precautionary measure. According to a spokesperson for the company, “deposits and withdrawals via Silvergate have been temporarily suspended.”
Bitstmap, a crypto exchange based in Luxembourg, said in a blog post that it would temporarily suspend its support for bank transfers carried out via Silvergate, and instead, it would process its U.S. dollar payments through Signature Bank, another bank favored by digital asset firms.
Gemini, a cryptocurrency exchange established by the Winklevoss twins in 2014, announced that it will stop receiving customer withdrawals and deposits, as well as fulfilling wire transfers via Silvergate on its platform.
Circle, the company that issues the stablecoin USDC, stated that it was also distancing itself from Silvergate, and is notifying customers as it “unwinds certain services” with the bank
Paxos, another company involved in issuing stablecoins, indicated that it had stopped transfers to its account with Silvergate. However, the company added that it would “continue to process all outgoing payments.”
The CTO of Tether, a stablecoin, stated on Twitter that the firm had no exposure to Silvergate. Cboe Clear Digital announced that it was “pausing all transactions” with Silvergate Bank, according to a notice released by the company on Wednesday.
Galaxy Digital, an investment firm led by Mike Novogratz, also cautioned that it had stopped receiving or initiating transfers to Silvergate
In the past, Silvergate reported a significant decline in its bank deposits during the final quarter of 2022, losing $8.1 billion, a 68% drawdown, due to the collapse of FTX cryptocurrency exchange. To manage the increased number of withdrawals, the bank secured a $4.3 billion loan from the Federal Home Loan Bank and sold around $5.2 billion in debt securities.
The bank faced scrutiny from Congress, with lawmakers such as Elizabeth Warren questioning its role in FTX’s collapse. The Department of Justice also disclosed an investigation into the bank’s relationship with the bankrupt exchange.
Moreover, investors on Wall Street, including George Soros’s hedge fund, have bet against Silvergate, making it one of the most shorted publicly-traded companies in the U.S., with 71% of its shares available for trading being sold short, according to MarketWatch data.
Source: Decrypt
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