Silvergate Deepening Crisis Rocks Crypto Stocks

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March 6 (Reuters) – Shares of Silvergate Capital Corp (SI.N) fell 10% in early trading on Monday after banks suspended their cryptocurrency payments network and questioned the viability of the business. Did.

The crypto-focused bank said late Friday that it had taken a “risk-based decision” to shut down the Silvergate Exchange Network (SEN) with immediate effect.

A Wedbush analyst said, “SEN is Silvergate’s flagship product and was previously the main attraction for depositors to bring funds into the bank.

The cancellation could indicate that Silvergate may consider winding down its operations, they added.

Shares of peer crypto lending Signature Bank (SBNY.O) also fell about 2.5 percent in morning trading, while crypto exchange Coinbase Global (COIN.O) fell about 1 percent. Shares of cryptocurrency firm Riot Platforms (RIOT.O) and BTC mining machine makers Evan International and Canaan (CAN.O) fell between 1% and 2%.

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“The cryptocurrency market reacted to the negative news from Silvergate Bank, with both Bitcoin and Ethereum dropping about 4.8% over the week,” analysts at brokerage firm Bernstein said.

Silvergate’s stock hit a record low of $4.86 on Friday, losing nearly 98% of its value since closing at an all-time high in November 2021, removing more than $7 billion from the company’s market cap. Cleaned up.

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Analysts at Wedbush said, “We believe the trustee/liquidation scenario is a distinct possibility, with a liquidation value of $5 per share.” It is down about 13% from its closing price.

A number of cryptocurrency giants, including Coinbase Global, have dropped Silvergate as their banking partner.

The company has been struggling after investors withdrew $8 billion from banks in the last three months of the year following the collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange in November. rice field.