Customers of US Bank Silvergate Withdrawn Over $8bn of Crypto-Linked Deposits

Customers of the American bank Silvergate have withdrawn more than $8 billion from their cryptocurrency-related deposits.

Economy

Silvergate hit with $8bn in crypto withdrawals. Source: Pixabay.com

About 65% of Silvergate’s customers have withdrawn their deposits in the last three months of 2022. The bank sold its assets worth $5.2 billion. This decision was made by a financial institution to cover expenses. Also, the sale of assets was necessary for the bank to remain liquid.

Customers began withdrawing their deposits after the statement of American regulators that the issuance and storage of deposit with a high degree of probability will not be compatible with safe and reliable banking practices.

Silvergate listed on the New York Stock Exchange. For this reason, the bank regulated within the financial sector. Silvergate is one of the few representatives of its segment providing services related to cryptocurrencies.

Also, the active withdrawal of deposits was provoked by the collapse of the FTX crypto exchange. This cryptocurrency exchange was valued at $32 billion until November when it filed for bankruptcy.

Former FTX CEO Sam Bankman-Fried doesn’t consider the accusations of cheating clients and investors to be fair. The prosecutor’s office claims that the bankruptcy of the crypto exchange led to the fact that up to a million creditors lost their money.

Alan Lane, chief executive of Silvergate, called the asset sale a measure to cover withdrawals by customers. He called the actions of consumers of financial services a response to the rapid changes in the field of digital assets.

Silvergate has taken a unique place in the market. This financial institution satisfied the needs of cryptocurrency companies that wanted to receive banking services from traditional sources. One of the clients was Alameda Research, owned by Sam Bankman-Fried. At the end of last year, this company was declared bankrupt.