Last month, it emerged that US government agencies were investigating Silvergate Bank's connection to bankrupt FTX and Alameda Research. As a result, Moody's downgraded the bank due to a cut in its underlying credit assessment and Silvergate had already failed to file annual reports with the US Securities and Exchange Commission (SEC) in March. The latter caused many users to worry about the bank's insolvency.

What’s going on with Silvergate Crypto Bank

Generally speaking, Silvergate Bank was a bank that specialised in servicing digital currencies and fintech companies. It provided banking services for cryptocurrency exchanges, institutional investors and other companies that deal in digital assets. In other words, the platform allowed large customers to exchange fiat currencies like dollars or euros. And this is needed to enter and exit the coin niche.

The bank created the Silvergate Exchange Network (SEN), a platform for exchanging cryptocurrencies between members of the network, i.e. the aforementioned big clients. Even before SEN was suspended, the number of those same customers had dropped significantly, with Coinbase and Kraken exiting the network, adding to investor fears that Silvergate was about to collapse.

Unlike its former partner in the FTX exchange, Silvergate plans to fully reimburse any customer deposits or funds that may have been lost after its operations ceased. According to CryptoPotato’s sources, Silvergate is experiencing huge problems, but is still not bankrupt.

The bank’s official announcement notes that its management does not want to go “all the way”. Here’s a relevant rejoinder to what’s going on.

In light of recent industry and regulatory changes, Silvergate believes that an orderly winding down of the bank’s operations and voluntary liquidation is the best course of action.

At the time of this announcement, Silvergate is already under investigation by Congress, the US Federal Reserve and the California Department of Financial Protection and Innovation. The liquidation of Silvergate will be accompanied by the consultancy firm Centerview Partners LLC and the law firm Cravath, Swaine & Moore LLP.

The crisis in cryptocurrencies’ cooperation with the banking industry is already extending beyond Silvergate. The day before it was revealed that Crypto.com platform can now only serve customers from the European Economic Area without the ability to accept deposits even in US dollars. All due to problems with the platform’s banking partners, Coindesk reports.

Crypto.com lost its ability to accept dollar deposits after the platform’s US-based partner Metropolitan Commercial Bank stopped providing services to cryptocurrency companies in January this year. However, Crypto.com still offers users the ability to buy cryptocurrencies via credit card, and in September it also began offering new users discounts on transaction fees.


Note that such a scheme is quite popular in the cryptocurrency world. In short, cryptocurrency exchanges reduce commissions or even cancel them for certain trading pairs. This is done at a loss, but at the same time, trading platforms also gain new customers. And when the zero-commission promotion ends, they are likely to stay trading on the same platform.

Kaiko analysts previously noted that popular US cryptocurrency exchange Coinbase was able to increase its own market share in the region from 40 percent to 50 percent in 2022. The platform was helped by large traders, who were attracted just by lower trading fees in September 2022.


A Crypto.com spokesperson declined to name specific banking partners of the exchange and only noted that it works with “a variety” of organisations. He also said that the transition to a new payment provider was completed on 25 January.

By the way, Silvergate's problems are not the only ones in this area. The Silicon Valley Bank was reported to be malfunctioning overnight and its shares dropped 60 per cent during the day. Naturally, such news has not helped the atmosphere in the cryptocurrency industry, which has experienced a serious collapse.

Also this week, rumors emerged that JPMorgan Bank was allegedly discontinuing its relationship with the Winklevoss brothers’ Gemini crypto exchange. However, representatives of the trading platform have denied this information.

Data from analytics platform Nansen shows that Crypto.com has an exchange balance of $3.6 billion and a Stablecoin balance of $776 million. In the last week, there was a net positive inflow of $248.8 million.


We believe that the end of Silvergate Bank has already affected the cryptocurrency market and will affect it in the short term. Obviously, cryptocurrency giants in the form of exchanges and other centralized platforms will find a replacement for said company, but what is happening now clearly shows the fragility of the whole industry. Perhaps a bank from cryptocurrency exchange Kraken, due to launch soon, will normalise the situation.