THE LARGEST US CRYPTO BANK ANNOUNCED LIQUIDATION

The firm stated that the voluntary liquidation of one of the largest banks in the cryptocurrency market would be the most appropriate solution in the context of the crisis experienced by the industry.

Experts attribute its liquidation to the financial collapse that befell the FTX exchange. Earlier, the credit institution tried to emphasize its close cooperation with the cryptocurrency exchange by opening separate accounts for it.

Earlier, the bank attracted deposits in excess of $14 billion, becoming the largest US organization working with digital assets. However, the bankruptcy of FTX Group, which occurred in November 2022, dealt a blow to the bank's reputation. The share of customers storing cryptocurrency in the bank decreased from 25% to 15%. The amount of funds on deposit accounts decreased to $7.3 billion in the fourth quarter compared to $12 billion in the previous quarter.

Silvergate Bank is known as a partner organization for the Binance US crypto exchange. And if in the third quarter of 2022 the bank recorded $40.6 million in profit, then the fourth quarter was a disaster for the organization. The bank's net loss amounted to $1 billion.

After learning about the liquidation of Silvergate Bank, the largest players in the cryptocurrency market hastened to disown their ties with the credit institution. The Coinbase exchange reported that it did not store corporate or client assets in the bank. The head of the OKX crypto exchange expressed regret over the liquidation of the bank. According to Hong Fang, such a decision will slow down the process of introducing cryptocurrencies into everyday life.

Representatives of the financial and technological company Paxos declared their independence from the bank. According to market participants, asset redundancy is already built into the digital business platform, and the liquidation of the bank will not affect the company's work.

It is known that after a financial failure and a massive withdrawal of funds, the bank was forced to get rid of multibillion-dollar assets. Experts of the FDIC (a federal organization engaged in deposit insurance in the United States), who studied the bank's liquidity, previously considered the possibility of attracting investments to save the credit institution.

But the US Department of Justice has already become interested in the situation. Now the federal services are checking the transactions that the bank concluded with FTX and the Alameda Research hedge fund. According to experts, these investigations may become the basis for charging the bank's management with violating the law.

Representatives of the bank said that the liquidation program assumes that all obligations on deposits will be repaid. Now the bank advises Centerview Partners on financial issues. The legal aspects of the liquidation will be handled by the agency Cravath, Swaine & Moore. The main question is whether it will be possible to settle claims from customers so that the value of assets is not lost.

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