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Silvergate Capital Slow Down Operations Of Silvergate Bank

Silvergate Capital Corporation, the parent company of major crypto bank Silvergate Bank, has announced its decision to wind down and liquidate the bank.

Citing recent industry and regulatory developments, Silvergate Capital Corporation revealed the voluntary liquidation plan for Silvergate Bank, ensuring the full repayment of all deposits.

In March, crypto firms including Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital severed ties with the bank following an investigation into its alleged involvement in the collapse of FTX. The bank closed its exchange network on March 3, citing a risk-based decision.

As a significant banking partner for numerous crypto firms, Silvergate’s solvency became a concern, especially after announcing a two-week delay in filing its annual 10-K report, offering insight into the company’s financial situation.

The collapse of Silvergate is expected to increase regulatory scrutiny on the ties between the banking sector and the crypto industry in the United States. However, some in the crypto industry argue that the failure of Silvergate was more due to traditional banking risks than its exposure to crypto assets.

BTC has rallied over 25% since the news about Silvergate Bank, indicating a potential shift to Bitcoin amidst banking uncertainties.

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Despite concerns, sources suggest that the collapse of Silvergate Bank is unlikely to have a long-term impact on the crypto industry. It may, however, lead to short-term consequences, including increased difficulty and cost for crypto companies seeking banking services in the US.

As the crypto industry faces disruption, Bitcoin’s resilience is evident, providing an alternative to the traditional financial system. The current challenges are viewed as a growth phase for the industry, eliminating bad actors and solidifying Bitcoin’s position as a stable entity, especially amid banking turmoil.

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