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Silvergate Capital (SI) said Wednesday afternoon it will wind down operations and voluntarily liquidate its bank after a collapse in the crypto market saw billions in deposits leave the bank in recent months.
"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 La Jolla, California bank said in a regulatory filing.
"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," Silvergate said.
Shares of Silvergate have plummeted more than 42% in after-hours trading. The stock opened at $150 per share on the first trading day of last year.
After the collapse of crypto exchange FTX in late 2022, Silvergate posted nearly a billion dollar loss and saw its total deposits from digital asset customers decline to $3.8 billion from $11.9 billion through its fourth quarter.
Exactly a week ago the company filed a notice it would delay the filing of its annual report citing business and regulatory challenges, which had caused the company to weigh how much changes might affect its "ability to continue as a going concern for the twelve months."
The notice caused the stock to plummet by more than half last Thursday. Shares fell below $3.00 in Wednesday's after-hours trading.
Following last week's notice, crypto-related firms using the bank such as Coinbase, Paxos, Galaxy Digital and others distanced themselves from Silvergate, hastening further withdrawals.
The company suspended the Silvergate Exchange Network (SEN) on Friday afternoon. Along with Signature Bank's Signet platform, SEN was one of two platforms that offered crypto firms U.S. banking access outside regular banking hours.
Silvergate Bank, a state-charted bank, is jointly regulated by the Federal Reserve and the state of California. Its holding company, Silvergate Capital, is also regulated by the Federal Reserve.
California's Department of Financial Protection and Innovation is monitoring the situation according to a statement from its commissioner, Clothilde Hewlett.
"The Department is evaluating compliance with all financial laws, as well as safety and soundness obligations, and is working closely with relevant Federal counterparts," Hewlett added.
Citing an unnamed source, Bloomberg reported Tuesday afternoon that the Federal Reserve had approved the Federal Deposit Insurance Corporation (FDIC) to begin talks with Silvergate to avoid a shutdown. FDIC examiners have been at the business' headquarters since last week.