Crypto bank Silvergate’s ‘collywobbles’ could add to industry’s woes
Another massive crypto-centric firm bit the dust this week, leading some analysts to forecast bigger problems for the overall ecosystem.
Silvergate Capital, a publicly traded crypto bank, announced Wednesday that it would “wind down operations and voluntarily liquidate” its bank division.
The news from the California-based firm followed a run that resulted in it selling off assets at a huge loss to cover over $8 billion in withdrawals amid the broader crypto ecosystem meltdown.
“It is not the first bank to get the collywobbles,” Katharine Wooller, business unit director at Coincover, said to TechCrunch. “Ultimately the risk/reward ratio, in the face of increasing scrutiny, was not viable, as the ongoing crypto winter, worsened by the FTX scandal, shows no sign of thaw.”
As the company waves goodbye to its almost 10-year crypto experiment, it points to a bigger issue for the ecosystem. The institution, which was one of the few banks that acted as an intermediary in the space of institutional crypto, is yet another victim of the “crypto winter” following the implosion of FTX, which used the bank to transfer customer funds.
Although the news feels big, “market participants seem to be shrugging this off,” according to Julius de Kempenaer, senior technical analyst at StockCharts.com. The number of providers for the crypto ecosystem is shrinking, which could become a bigger problem if this trend continues, he added.
