Silvergate suspends crypto payments network; Stocks drop after hours

(Reuters) – Silvergate Capital Corp. said on Friday it had taken a “risk-based decision” to shut down the Silvergate Exchange Network, a cryptocurrency payments network, two days after the digital asset-focused bank raised suspicions about it. feasibility.

“Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN), effective immediately. All other deposit-related services remain operational,” Silvergate said in a statement posted on its website.

The Silvergate Exchange Network, one of the bank’s most popular offerings, has enabled round-the-clock transfers between investors and cryptocurrency exchanges, unlike traditional bank transfers, which can take days to clear.

Shares of Silvergate fell more than 2% in after-hours trading Friday, after closing up 0.9% at $5.77 in regular trading. Shares fell Thursday to a record low, ending the day down more than 97% from their all-time high in November 2021.

Silvergate warned Wednesday in a filing that it was assessing its ability to operate as a going concern, revealing that it had sold additional debt this year at a loss and that more losses meant the bank could be “less than well-capitalized.”

After the warning, cryptocurrency heavyweights including Coinbase Global Inc and Galaxy Digital dropped Silvergate as their banking partner. Stablecoin issuers Paxos and Circle, digital asset exchange Cboe, and cryptocurrency exchanges Bitstamp and Gemini have also suspended their partnership with Silvergate.

Additional reporting by Akriti Sharma in Bengaluru; Editing by Leslie Adler

Our standards: Thomson Reuters Trust Principles.