Silvergate Saga: Bitcoin hits lowest point in 3 weeks as popular Crypto bank liquidates

Bitcoin reached its lowest point in more than three weeks amid the liquidation of a well-known Crypto bank, Silvergate.

Bitcoin slipping to its lowest point in a month. The price of the biggest cryptocurrency by market valuation, which had fallen more than 2% on the previous day, was trading at about $21,750 at the time of filing this report. It had briefly fallen below $21,600 after mostly hanging over $22K for most of this month. 

Ether performed similarly to bitcoin and had a 2% decline to trade just above $1,530. Its peak of almost $1,700 in late February was far below that level. 

What caused it: The holding company of crypto-friendly Silvergate Bank, Silvergate Capital Corp. (SI), announced Wednesday that the financial institution will “voluntarily liquidate” its assets and cease operations. 

Following its announcement last week that it would have to postpone publishing its annual 10-K report because of concerns raised by its independent auditors and accounting firm regarding its financial information, the bank came under fire.

A notice by the company, Wednesday, said all deposits will be fully returned as part of the winding down. Part of the statement said:

• “The law firm Cravath, Swaine and Moore LLP, Strategic Risk Associates, and Centerview Partners have all been brought on board by Silvergate Corp. to provide “transition management assistance,” according to the company’s release from Wednesday. 
• “Silvergate thinks that the wisest course of action is a voluntary liquidation of the Bank and an orderly winding down of its operations in light of recent regulatory and industry developments. The wind-down and liquidation strategy of the Bank provides for the complete refund of all deposits.”

Settling the dispute: The business is also thinking about the best ways to settle disputes and protect the remaining value of its assets, particularly its in-house technology and tax assets “In a news release, Silvergate Corp. stated. 

The ability of Silvergate Bank to continue as a “going concern” over the following year may be in doubt, the bank disclosed, noting that it was the subject of inquiries by the Department of Justice and bank regulators. 

Crypto firms shun Silvergate: Several top crypto-based clients like Coinbase declared they would cease their business relationships with the bank as a result, and the stock price of the bank’s parent company dropped 58% in intraday trading to an all-time low of $5.72, representing a loss of over $115 over the previous year. Following the statement on Wednesday, the stock fell even further in after-hours trade. 

Another cryptocurrency-friendly bank, Signature Bank, experienced a 5% decline in its stock in after-hours trading before somewhat recovering. 

Since 2013, Silvergate has offered banking services to cryptocurrency businesses, and it has also introduced its internal settlement technology, the Silvergate Exchange Network (SEN). SEN has been suspended, Silvergate reported late on Friday.