Dirty Bubble Media | Jan. 10, 2023
The crypto-friendly Silvergate Bank (SI) has had a rough couple of months. Ever since it was revealed that Silvergate was doing a lot of business with the now-disgraced crypto mogul Sam Bankman-Fried, investors and customers have grown wary of certain heretofore unappreciated risks of working with cryptocurrency businesses. Silvergate shed 68% of their total deposits, some $8.1 billion, in this quarter according to preliminary reports. Their need for cash forced them to sell debt instruments early, reportedly leading to a loss of some $718 million.
Silvergate’s financial woes are matched by its legal concerns. It was discovered that Silvergate was allowing Alameda Research to receive customer deposits that were supposed to be going to the FTX exchange. In addition to new attention from regulators, Silvergate faces a class action lawsuit from FTX victims alleging that the bank was complicit in the FTX fraud.
While Silvergate has received most of the public wrath for its role in this fraud, another crypto-friendly bank has avoided much attention from the media: Signature Bank of New York (SBNY). Silvergate and Signature have unique relationships with the cryptocurrency industry. Both companies created their own private blockchains, the Silvergate Exchange Network (SEN) vs. SBNY’s Signet, to service their crypto clients by providing 24/7/365 dollar transfer services. These services have been wildly popular, with each firm performing hundreds of billions of dollars in transaction volume each quarter:
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