Circle Discontinues Silvergate Partnership
Circle, the issuer of the USDC stablecoin, has announced that it is discontinuing specific services with Silvergate Capital, a California-based crypto bank that provides banking solutions to cryptocurrency companies. The move comes after Silvergate’s parent company’s stock, Silvergate Capital, dropped by 47% on March 2, following the postponement of the bank’s yearly 10-K report submission. Silvergate cited the need for additional time for its auditing firm to complete specific audit procedures and review regulatory inquiries and investigations.
USDC stablecoin issuer Circle has announced its withdrawal from specific services involving Silvergate Capital, joining other companies in distancing themselves from the troubled crypto bankhttps://t.co/JeEQXIHt9k
— crypto.news (@itscrypto_news) March 3, 2023
Circle stated that it is taking steps to discontinue certain services with Silvergate and is informing customers accordingly. However, the company noted that it maintains relationships with a variety of banking partners, not just Silvergate, and that all its services, including USDC, are operating normally.
Share Price Drops after FTX Collapse
Since the downfall of the FTX cryptocurrency exchange last year, Silvergate has faced several challenges. In January, the bank’s share price declined by 40% in a day after revealing significant fourth-quarter withdrawals following the FTX collapse. In February, the US Department of Justice launched an inquiry into the bank’s transactions with FTX and its affiliated business, Alameda Research.
The drop in Silvergate’s shares also impacted other companies. Signature Bank, which provides banking services to cryptocurrency startups, hit a 52-week low during the day and has since fallen by approximately 6%. Coinbase’s share price experienced a drop of around 7%, but the cryptocurrency services company stated that it had minimal corporate exposure to Silvergate and had ceased accepting or initiating payments to or from the bank. Similarly, hedge fund Galaxy Digital and stablecoin issuer Paxos have also implemented the same action.
Gemini halts Silvergate Transactions
Gemini, the crypto exchange founded by the Winklevoss twins in 2014, has also announced that it is halting customer withdrawals and deposits, and wire transfers via Silvergate on its platform. The developments concerning Silvergate Capital are a reminder of the risks involved in the cryptocurrency industry and the need for caution when dealing with it.
