Business intelligence firm MicroStrategy, stablecoin issuer Tether have become the latest two firms to publicly deny any meaningful exposure to Silvergate Bank.<\/p>\n
The news comes after Silvergate announced on March 1 that it would postpone the filing of its annual 10-K financial report,<\/a> which has many fearing the cryptocurrency bank may be on the brink of a bankruptcy filing.<\/p>\n This led MicroStrategy \u2014 which holds over 130,000 Bitcoin (BTC<\/a>)\u00a0\u2014 to confirm that its BTC collateral is not custodied with Silvergate.<\/p>\n The Michael Saylor-founded firm added that it will not need to pay back a loan from Silvergate until Q1 2025 and that a bankruptcy or insolvency event wouldn\u2019t \u201caccelerate\u201d the loan repayment. <\/p>\n We have a loan from Silvergate not due until Q1 \u201825. There are mkt concerns re SI\u2019s fin. condition. For anyone wondering, the loan wouldn\u2019t accelerate b\/c of SI insolvency or bankruptcy. Our BTC collateral isn\u2019t custodied w\/ SI & we have no other financial relationship w\/ SI.<\/p>\n \u2014 MicroStrategy (@MicroStrategy) March 2, 2023<\/a><\/p><\/blockquote>\n Paolo Ardoino, the chief technology officer of Tether, confirmed in a March 2 tweet that Tether is not exposed to Silvergate either. <\/p>\n #Tether<\/a> does not have any exposure to Silvergate.<\/p>\n \u2014 Paolo Ardoino (@paoloardoino) March 2, 2023<\/a><\/p><\/blockquote>\n A collapse of the cryptocurrency bank could prove costly for the rest of the industry.<\/p>\n Silvergate is a fintech firm that provides financial infrastructure solutions and services to some of the largest cryptocurrency exchanges, institutional investors and mining companies in the world. <\/p>\n It offers a 24\/7 payments platform, named Silvergate Exchange Network, which has reportedly<\/a> processed over $1 trillion in transactions since 2017. <\/p>\n The firm also provides a stablecoin infrastructure platform, digital asset custody management and collateralized lending services to several institutional players in the cryptocurrency industry.<\/p>\n Despite the large network effects, the late 10-K filing appears to have had a consequential effect on its partnerships. <\/p>\n Within 24 hours of the late 10-K filing, Coinbase, Circle, Bitstamp, Galaxy Digital and Paxos<\/a> confirmed that they will scale back their partnerships with the cryptocurrency bank in some capacity. <\/p>\n Gemini also announced<\/a> that it has stopped accepting customer deposits and processing withdrawals through Silvergate ACH and wire transfers.<\/p>\n Others who have seemingly cut or reduced ties include Crypto.com, Blockchain.com, Wintermute, GSR and Cboe Digital, according to reports.\u00a0<\/p>\n Meanwhile, a spokesperson from crypto exchange Binance confirmed to Cointelegraph that Binance has no partnership with Silvergate and does not use the crypto bank’s services.<\/p>\n Silvergate failed to file their annual report citing regulatory investigations. Possibly not solvent.<\/p>\n They already lost majority of their partners. pic.twitter.com\/LKdQtNfRRe<\/a><\/p>\n \u2014 Quinten | 048.eth (@QuintenFrancois) March 2, 2023<\/a><\/p><\/blockquote>\n Concerns of Silvergate\u2019s potential financial troubles first surfaced in Q4 2022, when it reported a net loss of $1 billion<\/a>\u00a0as a result of the shock collapse of FTX in November. <\/p>\n Related: <\/em><\/strong>Coinbase no longer accepts payments via Silvergate Bank<\/em><\/strong><\/a><\/p>\n The exact dealings between Silvergate and FTX<\/a> have been subject to a probe by the United States Department of Justice recently, although there\u2019s been no accusation of wrongdoing at this point. <\/p>\n Plaintiffs in a newly proposed class-action lawsuit against FTX<\/a> on Feb. 14 accused Silvergate of \u201caiding and abetting\u201d a \u201cmultibillion-dollar fraudulent scheme\u201d that was orchestrated by former FTX CEO Sam Bankman-Fried. <\/p>\n Despite many firms recently claiming not to have exposure to Silvergate, the bank still processed over $3.8 billion in customer deposits in Q4 2022. This was a steep fall from $11.9 billion in Q3 2022, according<\/a> to Silvergate.<\/p>\n Since the news of the late 10-K filing on March 1, Silvergate\u2019s stock price has fallen a massive 58.7% to $5.57. The stock is now down over 97% since its all-time high of $219.7, hit on Nov. 14, 2021.<\/p>\n<\/div>\n\n
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