Silvergate Loses More Partners Mid Crisis

Key points:

• Many big names in the crypto space in the United States have announced they are severing ties or affirming that they have no relationship with Silvergate Bank.
• Digital Asset Capital Management also announced that it is looking for a new banking partner in Switzerland to replace the crypto bank in crisis.

Bank that accepts cryptocurrency Silvergate Bank lost five partners on March 2 as a result of a spate of investigations and lawsuits.

Following the announcement that Coinbase would no longer accept or initiate payments with Silvergate, companies such as stablecoin issuers Paxos and Circle, as well as Mike Novogratz’s Galaxy Digital, Gemini, and BitStamp, have announced similar actions regarding their partnerships with the crypto bank.

Coinbase had previously transferred its most important customers’ financial transfers to Signature Bank.

Out of prudence, Galaxy Digital said on March 2 that it has ceased receiving or starting transfers to the bank.

Paxos claimed in separate tweets on March 2 that it had already stopped all Silvergate Exchange Network transfers and wires to the firm’s account but would continue to handle outbound payments.

Circle also stated that it was in the process of terminating certain services with the crypto bank, while Bitstamp stated that its bank transfer services would be provided by other global banking partners.

Silvergate is a special bank that provides financial services to cryptocurrency companies. Recently, Silvergate has been experiencing difficulties in handling crypto-related transactions, especially in handling Bitcoin purchases.

But, Coinbase’s service cancellation has caused a crypto hedge fund to seek another banking partner. Digital Asset Capital Management (DACM), a crypto hedge fund with over $400 million in assets, revealed it was searching for a new banking partner in Switzerland following the Silvergate debacle.

DACM sent funds to and from Coinbase Global’s platform via Silvergate’s real-time network.

Richard Galvin, the co-founder at Digital Asset Capital Management, said in an interview Friday with Bloomberg:

“There are some banks that handle crypto transactions but they are not crypto focused, unlike Silvergate. It might take some time to find a banking partner. We’re speaking to some Swiss banks.”

Because of its quick and real-time bank transfer services, Silvergate was popular among cryptocurrency startups. In the lack of such facilities, transporting cash may take longer.

This news could be part of the reason why BTC price plunged this morning in Asia because the market is worried that if Silvergate collapses, it could make it difficult for many other crypto companies, such as MicroStrategy when they borrowed $205 million from the bank.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Harold

Coincu News