Silvergate Capital (NYSE:SI) shares tumbled after the company announced it will wind down operations and liquidate Silvergate Bank. The news comes about a week after the bank warned it may not be able to continue operating and follows a series of financial challenges and government investigations in the aftermath of the collapse of FTX, which was a customer of the bank.
The company is also considering how to best resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.
“In light of recent industry and regulatory developments,” read this morning’s new release, “Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward. The Bank’s wind down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets.”
The crypto-friendly bank was dealt a severe blow when its digital asset customers withdrew deposits in the wake of FTX's collapse and the subsequent drop in crypto asset prices. The U.S. Department of Justice started investigating the bank's relationship with Sam Bankman-Fried's businesses.
The decision comes less than week after Silvergate Bank announced that it would discontinue the Silvergate Exchange Network . All other deposit-related services remain operational as the company works through the wind-down process, it said.
On March 2, the company said it was assessing its ability to continue as a going concern, due to additional losses incurred and regulatory scrutiny.
SI shares caved $1.59, or 32.3%, to $3.33.
