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Host of Crypto Firms, Including Coinbase, Paxos and Galaxy, Jump Ship From Silvergate Bank
Coinbase's change is specific to banking in U.S. dollars and doesn't affect payment instructions in pounds or euros.
Updated May 9, 2023, 4:09 a.m. Published Mar 2, 2023, 1:19 p.m.
A growing group of crypto firms is ending its relationship with crypto-focused bank Silvergate (SI) after the bank delayed its 10K filing and said there were concerns about its ability to continue as a "going concern."
Coinbase (COIN) is no longer using Silvergate to facilitate dollar payments for its institutional customers and will now use Signature Bank (SBNY) for payments, the exchange said Thursday. Coinbase said it switched from Silvergate “out of an abundance of caution" in a tweet, adding that it has minimal exposure to the crypto-focused bank.
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Stablecoin issuer Paxos has also jumped ship from Silvergate, discontinuing transfers and wires to its account with the crypto-friendly bank. Fellow stablecoin issuer Circle tweeted on Thursday that "we are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers."
Galaxy Digital, Mike Novogratz's crypto-focused financial services firm has also stopped accepting or initiating transfers to Silvergate, according to a Bloomberg report, as has trading platform Cboe Digital. Crypto exchange Bitstamp has also temporarily withdrawn Silvergate Exchange Network (SEN) services for all its users.
In light of recent developments with Silvergate Bank, Paxos has discontinued all SEN transfers and wires to our Silvergate account. Paxos will continue to process all outgoing payments.
— Paxos (@Paxos) March 2, 2023
Silvergate announced on Wednesday that it will delay filing its annual report, sending its stock price plunging 10% in after-hours trading. The shares tanked 48% in afternoon trading Thursday on the back of multiple ratings cuts and the Coinbase news, while shares of Signature fell 7% following the news.
Coinbase's change is specific to banking in U.S. dollars and effective immediately, but doesn't affect payment instructions in pounds or euros and is effective immediately.
Read more: Silvergate Downgraded by JPM, Canaccord Amid Doubts of Bank’s Solvency
UPDATE (Mar. 02, 13:55 UTC): Updates headline and lead. Adds additional background throughout.
CORRECTION (Mar. 02, 14:25 UTC): Corrects lead to say exchange will now use Signature bank.
UPDATE (Mar. 02, 15:40 UTC): Adds paragraph and amends head to include Paxos leaving Silvergate
UPDATE (March 02, 17:33 UTC): Adds reference to Galaxy Digital, Cboe Digital, Circle and Bitstamp doing the same.
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