Everyone in the crypto market is holding their breath and following what is happening at crypto bank Silvergate. The latest news is that parent company Silvergate Capital shut down the Silvergate Exchange Network after its viability was called into question.
Silvergate is defeated
The California-based bank recently took a hit for its ties to FTX and Alameda Research. The stock is down about 95% in the past six months.
The company’s long-term rating was downgraded on Friday by Moody’s, which warned further downgrades were possible after the bank revealed it was poorly capitalized and failed to file its annual report on time.
High-profile clients have left the Silvergate shipwreck and moved their wealth elsewhere, wanting peace of mind that their money is safe. These are big names in the US crypto industry such as Crypto.com, Coinbase, Gemini and Galaxy Digital.
Silvergate’s own exchange
The bank also had its own exchange, it was not an exchange as you are used to, but an exchange service for crypto payments. So this is called the Silvergate Exchange Network (SEN).
Unlike regular wire transfers, which can take days to complete, the service allowed investors and cryptocurrency exchanges to make transfers at any time.
Heavy losses and investigations
Silvergate reported a $1 billion loss at the end of last year’s fourth quarter. More losses were reported in January and February, and it was announced last week that they failed to meet certain mandatory reporting requirements. The company has asked the SEC for a delay in reporting because it may need to review its own profitability.
In the same post, the bank wrote that it was under investigation by banking regulators and the US Department of Justice, and said it was uncertain whether it could continue next year.
This caused Silvergate’s share price to fall faster than Quincy Promes’ popularity.
Banking authorities have investigated SEN
The SEN suspension came after banking authorities sent several notices to different financial institutions. These authorities conduct controls regarding the risks associated with exposure to cryptocurrencies, including volatility.
Cryptocurrency exposure carries inherent risks, according to US government agencies. Unlike traditional investments, cryptocurrencies are decentralized and largely unregulated, leaving investors vulnerable to market volatility and fraud.
A common argument is that cryptocurrencies lack the stability of established financial systems, making them vulnerable to sudden and extreme price swings. The question is whether the ever-expanding scale of fiat currencies is any better.
Below, for example, the descending channel in which the Euro index is located.
Other arguments against established cryptocurrencies include the safety of exchanges and wallets, which can lead to asset losses.
gap in the market
Silvergate introduced SEN in 2017 to fill a gap in the then growing market demand for digital currency payment solutions. The network is especially popular with institutional investors for its ability to provide a secure, reliable and efficient payment infrastructure.
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Source: Btc Direct
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Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
