Host of Crypto Firms, Including Coinbase, Paxos and Galaxy, Jump Ship From Silvergate Bank (2024)
A growing group of crypto firms is ending its relationship with crypto-focused bank Silvergate (SI) after the bank delayed its 10K filing and said there were concerns about its ability to continue as a "going concern."
Coinbase (COIN) is no longer using Silvergate to facilitate dollar payments for its institutional customers and will now use Signature Bank (SBNY) for payments, the exchange said Thursday. Coinbase said it switched from Silvergate “out of an abundance of caution" in a tweet, adding that it has minimal exposure to the crypto-focused bank.
Stablecoin issuer Paxos has also jumped ship from Silvergate, discontinuing transfers and wires to its account with the crypto-friendly bank. Fellow stablecoin issuer Circle tweeted on Thursday that "we are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers."
Galaxy Digital, Mike Novogratz's crypto-focused financial services firm has also stopped accepting or initiating transfers to Silvergate, according to a Bloomberg report, as has trading platform Cboe Digital. Crypto exchange Bitstamp has also temporarily withdrawn Silvergate Exchange Network (SEN) services for all its users.
Coinbase's change is specific to banking in U.S. dollars and effective immediately, but doesn't affect payment instructions in pounds or euros and is effective immediately.
CORRECTION (Mar. 02, 14:25 UTC): Corrects lead to say exchange will now use Signature bank.
UPDATE (Mar. 02, 15:40 UTC): Adds paragraph and amends head to include Paxos leaving Silvergate
UPDATE (March 02, 17:33 UTC): Adds reference to Galaxy Digital, Cboe Digital, Circle and Bitstamp doing the same.
As an expert with a demonstrable understanding of the crypto industry, I can shed light on the recent developments within the crypto space involving Silvergate (SI) and the decisions made by prominent crypto firms such as Coinbase (COIN), Paxos, Galaxy Digital, Circle, Cboe Digital, and Bitstamp. My expertise in this field is underscored by my in-depth knowledge of the industry trends, regulatory dynamics, and the interplay between financial institutions and cryptocurrency businesses.
The situation revolves around Silvergate, a crypto-focused bank that has witnessed a growing number of crypto firms severing their ties with it. The catalyst for this exodus was Silvergate's announcement that it would delay filing its annual report, coupled with expressed concerns about its ability to continue as a "going concern." Such a declaration raises significant apprehensions within the crypto community, prompting key players to reevaluate their relationships with the bank.
Coinbase, one of the leading cryptocurrency exchanges, has notably shifted its dollar payment facilitation from Silvergate to Signature Bank (SBNY). This decision, as communicated by Coinbase, was made "out of an abundance of caution." Despite minimizing exposure to Silvergate, Coinbase's move underscores the far-reaching implications of the bank's troubles within the broader crypto ecosystem.
Stablecoin issuer Paxos has also joined the ranks of firms abandoning Silvergate, discontinuing transfers and wires to its account with the beleaguered bank. Circle, another stablecoin issuer, expressed sensitivity to the concerns surrounding Silvergate and is actively unwinding certain services with the bank, notifying its customers in the process.
Galaxy Digital, the crypto-focused financial services firm led by Mike Novogratz, and trading platform Cboe Digital have both ceased accepting or initiating transfers to Silvergate. Similarly, Bitstamp, a prominent crypto exchange, temporarily withdrew Silvergate Exchange Network (SEN) services for all its users.
The market's response to Silvergate's woes has been substantial, with its stock price plummeting 10% in after-hours trading after the announcement of the delayed annual report. Multiple ratings cuts and the subsequent news of Coinbase's shift further contributed to a 48% drop in Silvergate's shares during afternoon trading. Additionally, shares of Signature Bank fell by 7% following these developments.
The gravity of the situation is further emphasized by JPM and Canaccord downgrading Silvergate amid doubts about the bank's solvency. This underscores the broader implications of Silvergate's challenges on its standing within the financial sector and its relationships with crypto firms.
In summary, the recent events surrounding Silvergate and the decisions of major crypto players to distance themselves from the bank underscore the interconnectedness of traditional financial institutions and the crypto industry. The concerns about Silvergate's financial viability have triggered a domino effect, prompting a strategic shift among crypto firms to safeguard their interests and maintain stability in their operations.
Coinbase said it switched from Silvergate “out of an abundance of caution" in a tweet, adding that it has minimal exposure to the crypto-focused bank. Stablecoin issuer Paxos
Paxos
Paxos Trust Company is a New York–based financial institution and technology company specializing in blockchain. The company's product offerings include a cryptocurrency brokerage service, asset tokenization services, and settlement services.
https://en.wikipedia.org › wiki › Paxos_Trust_Company
“Coinbase has de minimis corporate exposure to Silvergate,” the company added in a tweet. Silvergate's shares tumbled by nearly 50% to $7 in early trading on the New York stock exchange on Thursday after Coinbase's announcement, before recovering slightly to $7.60.
Crypto.com, one of the leading crypto exchanges globally, has partnered with Silvergate, the leading provider of innovative financial infrastructure solutions to the digital currency industry.
At all times, these assets are yours – they never belong to Coinbase. Our platform is built to secure your digital assets while ensuring that they remain readily available for trading and other services that we provide.
Coinbase (COIN) is no longer using Silvergate to facilitate dollar payments for its institutional customers and will now use Signature Bank (SBNY) for payments, the exchange said Thursday.
It is also regulated and approved by the New York State Department of Financial Services. Within three months of being issued Pax Dollar achieved $5 billion in transactions, and as of 2023, it is the 54th largest cryptocurrency by market capitalization, with a market cap of $875 million.
It also offers settlement solutions for securities and commodities. Paxos clients include global enterprises PayPal, Credit Suisse, Societe Generale, StoneX and Revolut.
Paxos Trust Company is a New York–based financial institution and technology company specializing in blockchain. The company's product offerings include a cryptocurrency brokerage service, asset tokenization services, and settlement services.
San Diego's Silvergate Bank, which grew fast by catering to cryptocurrency traders, said late Wednesday that it is winding down operations and would liquidate amid mounting losses, customer defections and regulatory pressure.
Coinbase is no longer accepting or initiating payments to or from Silvergate. The news comes a day after the troubled crypto bank said it may be “less than well capitalized” and was “reevaluating its businesses.”
When initiating a bank transfer, you will see the funds pulled from your account immediately upon authorization. This is primarily so we can lock in your quoted price. Due to the irreversible nature of digital currency, we must also ensure that all funds have cleared prior to finalizing the transaction.
Holding Physical Cash. Many people compare owning cryptocurrency on an exchange like Coinbase to holding physical cash in a bank. Just like how the bank technically owns your money while it is deposited with them, Coinbase technically owns your crypto while you store it with them.
More than 6,000 Coinbase users had funds stolen from their accounts after hackers used a vulnerability in Coinbase's SMS-based two-factor authentication system to breach accounts.
The bankrupt company must produce a detailed schedule of assets and liabilities, among other financial statements and reports. During the bankruptcy process, the company, lawyers, and a bankruptcy judge work to determine who gets paid back, how much, and in what order.
While Coinbase has robust safety measures in place, the security of your account largely depends on your personal security practices. Here are six common scams and cyber threats that could put your Coinbase account at risk: Phishing emails and other attacks.
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