Silvergate Capital Corp (SI.N) announced that it has decided to discontinue its crypto payments network, the Silvergate Exchange Network, citing a “risk-based decision.”
This comes two days after the bank expressed doubts about the network’s viability.
While all other deposit-related services remain operational, the Silvergate Exchange Network was a popular offering that allowed for 24/7 transfers between investors and crypto exchanges, in contrast to traditional bank wires that can take several days to settle.
Following the announcement, Silvergate’s shares fell by over 2% in after-hours trading, after closing at $5.77, up 0.9% in regular trade.
The bank’s shares hit a record low on Thursday, dropping more than 97% from their all-time high in November 2021.
On Wednesday, Silvergate filed a warning that it was assessing its ability to continue operating as a going concern.
The filing revealed that the bank had sold more debt securities this year at a loss, and due to further losses, it may not meet the criteria to be classified as “well capitalized.”
As a result of this warning, prominent cryptocurrency companies, such as Coinbase Global Inc and Galaxy Digital, severed ties with Silvergate as their banking partner.
Other companies, including stablecoin issuers Paxos and Circle, Cboe’s digital asset exchange, and crypto exchanges Bitstamp and Gemini, also suspended their partnerships with Silvergate.
