SAN DIEGO — Silvergate, a crypto-focused bank based in San Diego, is shutting down. The bank announced its decision to voluntarily liquidate Wednesday after experiencing a market meltdown.
Silvergate was one of the first banks to get involved with crypto.
"Just when you say the news in cryptocurrency couldn't get any worse there's something right around the corner," said Tyrone Ross, CEO of 401 Financial.
He says Silvergate's announcement doesn't come as a surprise.
"Something those in the industry saw coming," he said.
Ross says it was a cascade of events that led to the shut down. In November, the crypto exchange FTX, who was a major customer of Silvergate, filed bankruptcy.
When FTX collapsed last fall, it lead to questions about how it failed to catch suspicious transactions. FTX executives said billions of dollars of customer funds were missing. According to Forbes, a large portion of that money were deposits held by Silvergate.
Since then, several top FTX executives have pleaded guilty to criminal charges and a DOJ investigation is ongoing.
"Silvergate was caught up in that and it was only a matter of time," he said. "A lot of large crypto banks started to pull away."
Earlier this year, Silvergate reported a net loss of $1 billion in the fourth quarter alone.
"The stock price cratered in the last two weeks so it's eventually we need to liquidate this and take it down," he said.
On Friday, Silvergate shut down its Silvergate Exchange Network, a service for its digital currency customers to fund their accounts.
The bank is now working with regulators to shutdown and released a statement saying, "The Bank’s wind down and liquidation plan includes full repayment of all deposits."
Silvergate says customers will be notified should there be any further changes.
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