• Silvergate Capital Corp (NYSE: SI) announced that it has decided to wind down operations and liquidate the Silvergate Bank.
• Shares of Silvergate Capital Corp crashed about 40% in extended hours on Wednesday after the crypto bank confirmed that it has decided to wind down operations.
• Silvergate currently has more than $11 billion in total assets.
Silvergate Stock Crashes After Wind Down Announcement
Silvergate Capital Corp (NYSE: SI) shares dropped by 40% in extended hours on Wednesday after announcing plans to wind down operations and liquidate the Silvergate Bank. The company, which had over $11 billion in total assets at the time of announcement, is now facing close to 75% losses since the start of 2023.
Wind Down Plan
In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward. The California-based company had already reduced its headcount by 40% back in January as part of cost-cutting measures before making this call today. Centerview Partners LLC will serve as financial advisors while Cravath, Swaine & Moore LLP will provide legal advice throughout this process.
Discontinuation Of Crypto Payments Network
The press release also stated that full repayment of all deposits was included in their wind down plan along with resolution for claims and preservation for residual value for its assets. Last week, Silvergate discontinued one of its core offerings – the Silvergate Exchange Network (SEN) but clarified that its other deposit related services were still operational at that time.
Competition From Signature Bank
Silvergate is not only crypto bank with these kinds of struggles; Signature Bank holds more than $114 billion in assets but is also struggling due to similar issues regarding industry regulations. This shows how difficult it can be for smaller companies to stay afloat when faced with such large competition from bigger players like Signature Bank who have been able to survive despite changes in regulations due to their larger asset reserves and stronger infrastructure support.
Overall, this news comes as a major blow for investors who had put their faith into this crypto bank only a few months ago when prices were much higher before they started plummeting recently due to various factors including industry regulations and competition from larger banks like Signature Bank who are better equipped to handle such changes. In any case, we’ll have to wait and see what happens next as more details emerge about this winding down process which could take some time given its complexity