• Coinbase announced it would no longer accept payments from or to Silvergate, a crypto-focused bank.
• LedgerX also reportedly ended its relationship with Silvergate, and will now use Signature Bank instead.
• Silvergate’s value plunged after it announced that it was delaying its annual report filing in its SEC report.
Coinbase Ends Relationship with Crypto Bank Silvergate
Coinbase has announced that it will no longer be accepting or initiating payments to or from Silvergate, a crypto-focused bank. This decision follows news of LedgerX ending their relationship with the same bank. Coinbase stated that all client funds remain safe and accessible and the decision was made out of an abundance of caution.
LedgerX Also Cuts Ties With Silvergate
LedgerX, a derivatives trading platform, has also reportedly ended its ties with the crypto bank as well and informed its clients that they will now use Signature Bank. Coinbase noted that they have taken proactive action to help ensure customers experience no impact from this change.
Silvergate’s Value Plunges After Delayed SEC Report Filing
Silvergates value took a plunge after they announced in their SEC report yesterday that their annual report filing would be delayed until March 16th 2023 due to weakening capital position since February 2021. They further revealed plans to record further losses related to other-than-temporary impairment on the securities portfolio which could result in them being less than well capitalized if these losses do materialize as expected.
Coinbase Reassures Clients Funds are Safe and Secure
Coinbase reassured clients by stating that they store cash in FDIC-insured US banks while large dollar deposits are kept in US government money market funds ensuring clients funds remain safe and secure throughout this process. The company added that they have minimal corporate exposure to Silvergate meaning this decision will not affect them significantly either way financially speaking despite having been allied with the cryptocurrency focused bank for some time now.
It is clear Coinbase had little choice but end their alliance with Silvergate given the current business climate surrounding the crypto bank and associated regulatory challenges making life difficult for those affiliated with them directly or indirectly as we have seen here today .