Coinbase, Paxos, And Galaxy Will No Longer Accept Transfers Through The Silvergate Network
Coinbase, Paxos, And Galaxy Will No Longer Accept Transfers Through The Silvergate Network

Coinbase, Paxos, And Galaxy Will No Longer Accept Transfers Through The Silvergate Network

Less than four months have passed since the demise of the FTX exchange, and cryptocurrency companies are once again finding themselves in the position of evaluating their exposure to a troubled partner and severing relations in advance to prevent an outbreak.

This time, the counterparty is Silvergate Capital Corp., which is a bank that is the driving force behind a widely utilized payments network that enables crypto companies to transfer money to one another in real time.

The insolvency of Silvergate’s most important customer, FTX, led to a rush on deposits that the company experienced as early as the previous year. On Wednesday, the financial institution announced that it had liquidated additional debt holdings at a loss and was evaluating its ability to continue operating normally. Additionally, it stated that an investigation into the matter had been opened by the Justice Department of the United States.

Cryptocurrency exchanges, stablecoin issuers, and trading desks all responded quickly to the warning after it was issued. Together with Gemini Trust Company,, and Cboe Clear Digital LLC, Coinbase Global Inc., Galaxy Digital, and Paxos Trust Co. have declared that they will no longer accept or originate payments through Silvergate.

The company that issues the stablecoin USDC, Circle Internet Finance Ltd., recently announced that it will “unwind certain services” with Silvergate. The cryptocurrency section of the Chicago-based trading behemoth DRW, which is known as Cumberland, stated that it has “little exposure” on Silvergate during the past few months. Kraken, a marketplace for digital assets, stated in a tweet that it is “actively monitoring concerns regarding Silvergate” and that it keeps a varied group of banking partners.

Falling Stock

On Thursday, the stock of Silvergate, which is situated in La Jolla, California, dropped by 58%. The share price dropped by 88% during the course of the previous year as the value of cryptocurrencies experienced a precipitous decline in the wake of a number of scandals and bankruptcies within the industry, including FTX. Wednesday was supposed to be the day that Silvergate submitted its annual report, but the company announced that it would be delaying the filing and stating that “it is working tirelessly to file its 10-K as soon as possible.”

The exodus poses a threat to Silvergate’s SEN network, which serves as a platform for participants in the cryptocurrency market to move money to one another and is the primary source of deposits for the bank. The platform provided by Silvergate has evolved into one of the most important infrastructure bridges in the sector, which has traditionally struggled to open bank accounts for its participants.

Bitstamp Ltd. asked users to switch to Signature Bank instead, and warned them that it cannot guarantee that any new funds transferred to Silvergate will be credited to their accounts, which may result in the potential loss of that money. Bitstamp Ltd. asked users to switch to Signature Bank instead.

The decision was made, according to Coinbase, “in light of recent developments and out of an abundance of caution.” Coinbase will facilitate cash transactions for institutional clients with its other banking partners going forward. Coinbase is the largest cryptocurrency exchange in the United States.

Coinbase, Paxos, And Galaxy Will No Longer Accept Transfers Through The Silvergate Network
Coinbase, Paxos, And Galaxy Will No Longer Accept Transfers Through The Silvergate Network

‘Risk Management’

The cryptocurrency financial services company Galaxy Digital, which was established by Michael Novogratz, has stated that it continues to have no meaningful exposure to Silvergate. According to an email sent by the company’s spokesman, the action was taken by the company “to guarantee client and firm assets are secure as part of our robust risk-management procedure.”

A significant cryptocurrency trading desk known as Cumberland has stated that its risk management methods have resulted in it having a “diversification of banking ties.” “On a consistent basis, we assess the risks that are connected with each organization to which we are exposed. We adhered to that procedure with Silvergate here, and as a result, we’ve had very little exposure over the course of the past few months,” a representative for Cumberland noted in an email.

Despite this, some businesses have decided to continue utilizing Silvergate’s services for the time being. TrueCoin, a stablecoin with a market value of around $1.16 billion, has stated that it is “taking efforts to ensure that escrowed monies are safe, however we are not abandoning Silvergate as a partner at this point.”

Information on time is our motto & our proud team really values these words. Journalistpr platform provides the most recent latest News. we appeal to readers to frequently check our website for the latest updates.

(Source Link)

About Rose Martin 764 Articles
I'm Rose Martin, and allow me to take you on a journey through my life as a content writer. With many years of experience in the field, I've had the privilege of shaping narratives and engaging audiences with the written word. My journey into the world of content writing was not a straightforward one. I didn't always know that I wanted to be a writer, but my passion for storytelling and a deep love for words led me down this fulfilling path. As a child, I was an avid reader, always immersed in the pages of books, eagerly exploring different worlds and perspectives.

Leave a Reply

Your email address will not be published.