California-based cryptocurrency bank Silvergate Capital is terminating crypto payment methods due to “risk-based decisions”. The bank officially announced the end of the moratorium on 3 March.
Silvergate’s share price has fallen nearly 60% over the past five trading sessions due to uncertainty and bankruptcy fears. Likewise, this announcement erased $23 billion of bitcoin’s market capitalization over the past few days.
United States Judge Michael Kaplan ordered Silvergate to return $9.85 million to crypto lender BlockFi on the same day. Silvergate and Blockfi signed an agreement in November 2022. According to a post on the website of BlockFi’s restructuring advice, the court pressured the bank to make an immediate refund due to the bankruptcy process.
According to reports, Silvergate acquired $3.6 billion from the U.S. Federal Home Loan Banks System, a network of 11 local banks. Due to the FTX collapse in 2022 BlockFi and Silvergate bank suffered a lot, and even crypto banks suffered liquidity issues amid these circumstances. Later on, Silvergate recorded $1 billion in net losses in the fourth quarter of 2022. Thus, BlockFi is also part of filing bankruptcy proceedings.
Due to the delay in representing the 10-K financial report, the crypto-friendly bank’s share price went downwards. Meanwhile, Coinbase, Circle, Bitstamp, Galaxy Digital and Paxos cryptocurrency firms also break up their relationship with Silverbank.
Over the past seven days, Silvergate Bank’s share price fell by more than 61% and closed at $5.77. Interestingly, Silvergate was the second most undervalued stock in the US in the month of February.
