Four Crypto-Related Firms Cut Ties With Silvergate Capital

Four crypto-related firms said Thursday (March 2) that they are cutting ties with Silvergate Capital.

The announcements made by Coinbase, Circle, Gemini and Paxos come a day after the bank said in a filing with the Securities and Exchange Commission (SEC) that it was delaying its annual report as it examines “certain regulatory and other inquiries and investigations that are pending with respect to the company.”

Coinbase said in a Twitter thread: “In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.”

At Coinbase all client funds continue to be safe, accessible & available.

In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.

— Coinbase ?️ (@coinbase) March 2, 2023

The cryptocurrency exchange platform added in the thread that its client funds remain safe and that it will facilitate institutional client cash transactions with other banking partners. That client cash is held at U.S. banks insured by the Federal Deposit Insurance Corporation (FDIC).

Circle said in a Twitter post: “We are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers.”

The peer-to-peer (P2P) payments technology firm and manager of the USDC stablecoin added in the post that it has relationships with several banking partners and that it is otherwise operating as normal.

Gemini said in a Twitter thread that it has stopped accepting customer deposits and processing withdrawals via an automated clearing house (ACH) and wire transfers through Silvergate to the Gemini exchange. It added that it holds all customer U.S. dollars at U.S. FDIC-insured banks or money market funds invested in U.S.-issued or guaranteed securities.

“We are actively monitoring the situation with Silvergate Bank,” the crypto exchange and custodian said in the thread. “We currently have zero customer funds and zero GUSD funds held at Silvergate.”

Paxos said in a Twitter thread that “in light of recent developments with Silvergate Bank,” it has discontinued Silvergate Exchange Network (SEN) transfers and wires to its Silvergate account while continuing to process all outgoing payments.

Statement from Paxos on Silvergate Bank: Paxos does not have any material exposure to Silvergate. Paxos’ priority has always been the protection of its customers’ funds and assets, and as such we leverage a diverse network of banking partners.

— Paxos (@Paxos) March 2, 2023

“Paxos does not have any material exposure to Silvergate,” the blockchain infrastructure platform said in the thread. “Paxos’ priority has always been the protection of its customers’ funds and assets, and as such we leverage a diverse network of banking partners.”

As PYMNTS reported Thursday, it’s unclear at the moment what the ripple effects could be should Silvergate cease to be a going concern, but Thursday’s action in the stock market shows a crisis of confidence.