On Wednesday (March 8), Silvergate Capital Corporation (NYSE: SI), the holding company for Silvergate Bank, announced “its intent to wind down operations and voluntarily liquidate the Bank in an orderly manner and in accordance with applicable regulatory processes.”
According to Silvergate’s press release, this was their move; they noted that all customer deposits would be fully repaid. Silvergate is also trying to figure out the best way to deal with claims against the firm and to maintain the remaining value of its assets.
Per a report by CoinDesk, U.S. Senate Banking Committee Chairman Sherrod Brown (D-Ohio) said in a statement,
“As the impact of FTX’s collapse continues to ripple outward, today we are seeing what can happen when a bank is overreliant on a risky, volatile sector like cryptocurrencies. I’ve been concerned that when banks get involved with crypto, it spreads risk across the financial system and it will be taxpayers and consumers who pay the price. That’s why I am continuing to work with my colleagues in Congress and financial regulators to establish strong safeguards for our financial system from the risks of crypto.“
Elizabeth Warren, the senior United States senator from Massachusetts, who is one of the most anti-crypto members of U.S. Congress, had this to say on Twitter:
Well, earlier today, crypto investor Adam Cochran explained what he thinks really caused Silvergate Bank to fail:
“Silvergate didn’t fail because of crypto risk, or because of illegal actions (that we know of). It failed because it followed the OCC rules for bank partial reserves, bought low liquidity Muni Bonds and then had a bank run. This was a failure of banking, not crypto.“
Featured Image via Unsplash