Over the last 24 hours, crypto bank Silvergate stock price fell by almost 60%.
Coinbase, an American cryptocurrency exchange established by Brian Armstrong and Fred Ehrsam in 2012, was the first to reveal that it was ceasing its partnership with Californian crypto bank Silvergate.
According to the Twitter thread shared by Coinbase, the move comes “in light of recent developments and out of an abundance of caution.”
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It can be assumed that the “recent developments” Coinbase mentioned are connected to the US DOJ investigation into Silvergate over its FTX and Alameda Research dealings. As well as the fact Silvergate Bank's stock price continues to fall. The first wave of stock price downfall was caused by Silvergate’s decision to postpone its Form 10-K submission by two weeks.
Upon the news, the price of Silvergate Bank stock fell by almost 31% and retailed just above $9. It is worth noting that, on March 1st Silvergate's stock trading closed at $13.54.
Shortly after Coinbase revealed the news on Twitter, another wave of stock price decline started. The stock price of a crypto-friendly bank fell by another 15% and was worth around $7.50.
However, that was only the beginning. Crypto firms like Paxos, Circle, Galaxy Digital, and Bitstamp announced that they are terminating their partnership with Silvergate. All companies have used the social media platform Twitter to break down the news.
On March 2nd, Galaxy Digital announced that it has “stopped accepting or initiating transfers to Silvergate.” On top of that, the company said that the move “was a part of <...> vigorous risk-management process to ensure client and firm assets are secure.”
A stablecoin issuer Paxos, which is facing its own problems over its Binance USD (BUSD), said the company has “discontinued all SEN transfers and wires to <their> Silvergate account.” Another stablecoin issuer Circle, shared a similar message, claiming that it is “sensitive to the concerns around Silvergate and is in the process of unwinding certain services with them.”
Cryptocurrency exchange Bitstamp said the company is “no longer processing transfers with Silvergate.” On top of that, the firm highlighted that “Bitstamp client funds remain secure and fully available.”
It is worth noting that in all announcements, companies emphasized that they do not have any exposure to Silvergate. On the same day, MicroStrategy and Tether also said they have no connections with the crypto-friendly bank.
Based on some reports, Gemini, Crypto.com, Blockchain.com, Wintermute, GSR, and Cboe Digital are also turning away from Silvergate.
On March 2nd, Silvergate stock price closed at $5.72, with a total decrease of almost 58%.
