Silvergate suspends its cryptocurrency payment network; shares drop after-hours

Silvergate Capital Corp (SI.N) announced on Friday that it has made a "risk-based decision" to stop its crypto payments network, the Silvergate Exchange Network, two days after the digital asset-focused bank expressed concerns about its viability.

“Effective immediately Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational,” Silvergate said in a statement posted on its website.

One of the bank's most popular initiatives, the Silvergate Exchange Network, permitted round-the-clock transfers between investors and crypto exchanges, as opposed to standard bank wires, which can often take days to clear.

Silvergate shares fell more than 2% in after-hours trading on Friday, after ending up 0.9% at $5.77 in normal trading. On Thursday, the shares hit a new low, ending the day down more than 97% from their all-time high in November 2021.

Silvergate cautioned in a filing on Wednesday that it was examining its capacity to continue operating as a continuing concern, revealing that it had issued new debt securities at a loss this year and that further losses imply the bank could be "worse than well capitalised."

Following the warning, cryptocurrency titans such as Coinbase Global Inc and Galaxy Digital abandoned Silvergate as a banking partner. Paxos and Circle, as well as Cboe's digital asset exchange and crypto exchanges Bitstamp and Gemini, have suspended their ties with Silvergate.

By fLEXI tEAM