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Silvergate Capital, a digital asset bank, has announced that it will be winding down operations and voluntarily liquidating. This news comes as Bitcoin and Ethereum have been trading lower following the announcement. Despite this, key industry-wide metrics such as spot trading volume, futures open interest, and DeFi total value locked have not moved much. According to CoinGecko, the world's largest independent cryptocurrency aggregator, this is likely due to most customers having switched to other banks or having alternatives lined up.
The decline of Silvergate dates back to January 5th when they cut 200 jobs and reported a decrease in digital asset customer deposits from $11.9 billion to $3.8 billion. On January 27th, the crypto bank suspended dividend payouts to preserve capital, and on January 31st, U.S. senators asked Silvergate to detail its risk management practices. Following this, federal prosecutors in Washington began probing into the bank and its dealings with bankrupt crypto exchanges. As a result, Coinbase Global Inc and Galaxy Digital have both dropped Silvergate as their banking partner.
In short, Silvergate Capital has announced its voluntary liquidation, causing a decline in Bitcoin and Ethereum prices. Despite this, key metrics from the crypto industry have not moved much due to customers having already switched banks or having alternatives lined up. The decline of Silvergate dates back to January 5th, when they cut 200 jobs and reported a decrease in customer deposits. Following this, several other events occurred, resulting in the loss of major banking partners.