Silvergate to the pearly gates

Silvergate has announced it’s “voluntarily” liquidating.

From the bank:

LA JOLLA, Calif.–(BUSINESS WIRE)– Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI), the holding company for Silvergate Bank (“Bank”), today announced its intent to wind down operations and voluntarily liquidate the Bank in an orderly manner and in accordance with applicable regulatory processes.

In light of recent industry and regulatory developments, 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.

In connection with the above: Centerview Partners LLC is acting as financial advisor, Cravath, Swaine & Moore LLP is acting as legal advisor and Strategic Risk Associates is providing transition project management assistance.

In addition, Silvergate Bank made a decision to discontinue the Silvergate Exchange Network (SEN), which it announced on March 3, 2023 on its public website. All other deposit-related services remain operational as the Company works through the wind down process. Customers will be notified should there be any further changes.

California’s banking regulator also released a statement on the news.

This comes five days after the bank said it would discontinue the Silvergate Exchange Network, its 24-hour crypto-payments transfer service.

For the TradFi types among us: this also comes a week after it said it couldn’t file its 10-K in a timely manner and warned that it was evaluating its ability to continue operating as a going concern. So this shouldn’t be that much of a surprise.

Anyway, the stock is tanking even more in after-hours trading, down 36 per cent to $3.12 per share at pixel time:

It’s been on a wild ride down over the past six months:

Shares of Signature Bank, which also has sought out crypto deposits and created its own crypto-transfer network in recent years, were falling as well. They were down a more-moderate 4 per cent at pixel:

In these early hours after the news, we can confidently and scientifically say that a crypto-competitor’s failure is either good for Signature Bank’s business (it attracts crypto-friendly depositors from Silvergate) or bad for its business (crypto markets crumble altogether). Or maybe it’s neither.

What is actually notable is that this appears to be the first regulated banking institution taken out by the crypto collapse. If we’re wrong about that, please do tell us in the comments and we’ll update. Suggestions for Silvergate’s epitaph are welcome as well.