Silvergate Bank
On March 8, 2023, Silvergate Bank (“Silvergate”) announced it would soon begin winding down its operations and intends to make full repayment on all deposits.
Although the Bankruptcy Code prohibits banks from filing for bankruptcy, Silvergate will proceed with its liquidation process under applicable state and non-bankruptcy federal law. Silvergate was initially founded in 1988 but emerged on the crypto scene beginning in 2013 when it begin a targeted effort of servicing crypto clients. In addition to taking deposits, Silvergate created a real-time payments system called the Silvergate Exchange Network which enabled customers to exchange crypto and fiat currencies. In 2022, Silvergate reported to have approximately $12 billion in deposits from crypto customers (comprising 90% of all deposits held by Silvergate), including major crypto investors and exchanges. FTX and affiliated companies controlled by Sam Bankman-Fried accounted for nearly $1 billion of these deposits. The recent cascade of bankruptcy filings in the crypto space, and the concurrent collapse in the value of crypto, resulted in a run on the bank, including over $8 billion in withdrawals by the end of 2022. Silvergate was ultimately unable to effectuate a turn-around and will soon dissolve.