{"id":24722,"date":"2023-01-10T17:10:38","date_gmt":"2023-01-10T17:10:38","guid":{"rendered":"https:\/\/www.africa-press.net\/mauritius\/all-news\/us-bank-silvergate-hit-with-8bn-in-crypto-withdrawals-2"},"modified":"2023-01-10T17:10:38","modified_gmt":"2023-01-10T17:10:38","slug":"us-bank-silvergate-hit-with-8bn-in-crypto-withdrawals-2","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/mauritius\/all-news\/us-bank-silvergate-hit-with-8bn-in-crypto-withdrawals-2","title":{"rendered":"US bank Silvergate hit with $8bn in crypto withdrawals"},"content":{"rendered":"

Africa-Press – Mauritius. <\/strong><\/span>Customers of US bank Silvergate, which provides cryptocurrency services, have withdrawn over $8bn (\u00a36.7bn) of their crypto-linked deposits. Around two-thirds of the bank\u2019s customers pulled their deposits in the final three months of 2022.<\/p>\n

The bank has sold $5.2bn in assets to cover the cost and remain liquid. It came as three US regulators warned banks that issuing or holding crypto was \u201chighly likely to be inconsistent with safe and sound banking practices\u201d.<\/p>\n

Silvergate is a bank listed on the New York Stock Exchange, and is therefore regulated within the financial sector. It is one of a small handful of businesses within this sector that provides cryptocurrency services.<\/p>\n

The withdrawals followed the collapse of the FTX crypto exchange, which was once valued at $32bn before its bankruptcy filing in November. Former FTX boss Sam Bankman-Fried has pleaded not guilty to charges that he defrauded customers and investors.<\/p>\n

Prosecutors say as many as one million creditors may have lost their money. The case has shaken the entire crypto industry, sparking bankruptcy filings at other firms and declines in crypto values.<\/p>\n

Alan Lane, chief executive of Silvergate, said the bank was selling assets to cover the withdrawals by customers \u201cin response to the rapid changes in the digital asset industry\u201d. Silvergate is the latest victim of the chilling \u201ccrypto winter\u201d that\u2019s been whipping through the industry since last spring.<\/p>\n

The so-called crypto bank occupied a fairly unique position in the market acting as a bank for cryptocurrency companies which struggled to get banking services from traditional sources.<\/p>\n

One of its customers was the now bankrupt Alameda Research \u2013 owned by Sam Bankman-Fried who awaits trial in the US accused of fraud. That in itself is a blow for Silvergate but Bankman-Fried\u2019s downfall has delivered a bigger blow to the company \u2013 market confidence.<\/p>\n

Since Bankman-Fried\u2019s empire collapsed, investors large and small have been pulling their money out of crypto companies with billions transferred from companies that store crypto funds.<\/p>\n

So far the biggest companies in the space like Binance and Coinbase have survived the unprecedented withdrawals and it appears as though Silvergate is weathering the storm too for now but at a huge cost to its balance sheet.<\/p>\n

Silvergate was a small US bank before it entered the world of cryptocurrency, and went public in November 2019. At the market\u2019s peak in 2021, its shares had grown by more than 1,500%, in no small part due to the massive growth of crypto in this period.<\/p>\n

During this time it tried to launch its own stablecoin \u2013 a form of cryptocurrency which is directly tied to an asset such as gold, the US dollar or other cryptocurrencies.<\/p>\n

And in January 2022, Silvergate spent $182m to acquire the technology behind Meta\u2019s proposed Diem (formerly Libra) stablecoin that never saw the light of day.<\/p>\n

In a filing to the US Securities and Exchange Commission, the bank said it had sold debt to cover the withdrawals and had written off the Diem purchase, meaning it is no longer counted as an asset.<\/p>\n

It has also reduced its staff by 40% \u2013 around 200 people \u2013 and altogether the withdrawals have caused the bank to lose $718m, a total higher than its profit since 2013.<\/p>\n

For More News And Analysis About Mauritius<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Mauritius. Customers of US bank Silvergate, which provides cryptocurrency services, have withdrawn over $8bn (\u00a36.7bn) of their crypto-linked deposits. Around two-thirds of the bank\u2019s customers pulled their deposits in the final three months of 2022. The bank has sold $5.2bn in assets to cover the cost and remain liquid. It came as three […]<\/p>\n","protected":false},"author":84,"featured_media":24721,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,9],"tags":[233,245,373,241],"class_list":["post-24722","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-miscellaneous","tag-africa-press","tag-africa-press-mauritius","tag-bank","tag-mauritius"],"yoast_head":"\nUS bank Silvergate hit with $8bn in crypto withdrawals - Mauritius<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/mauritius\/all-news\/us-bank-silvergate-hit-with-8bn-in-crypto-withdrawals-2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"US bank Silvergate hit with $8bn in crypto withdrawals\" \/>\n<meta property=\"og:description\" content=\"Africa-Press – Mauritius. Customers of US bank Silvergate, which provides cryptocurrency services, have withdrawn over $8bn (\u00a36.7bn) of their crypto-linked deposits. Around two-thirds of the bank\u2019s customers pulled their deposits in the final three months of 2022. The bank has sold $5.2bn in assets to cover the cost and remain liquid. 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