The share price of cryptocurrency-focused US bank Silvergate plummeted by nearly 50% in early trading on Thursday after fresh revelations about the extent of its exposure to the collapse of crypto exchange FTX raised questions about its ability to survive.
On Wednesday, it delayed publication of its annual report and announced a fresh sale of assets to repay debts, while warning that it was assessing “its ability to continue as a going concern” in a filing with the SEC, the US financial markets regulator.
Silvergate also hinted at further regulatory scrutiny ahead in the filing, which it said could hit its profitability.
It said its business could be adversely affected by “various litigation (including private litigation) and regulatory and other inquiries and investigations”, including by banking regulators, congressional committees and the US Department of Justice.
That warning caused a flurry of activity, with major partners including crypto exchange Coinbase dropping Silvergate in a rush to safety.
Coinbase, which used Silvergate to handle cash transactions for customers, said that in “light of recent developments and out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate”.
“Coinbase has de minimis corporate exposure to Silvergate,” the company added in a tweet.
Silvergate’s shares tumbled by nearly 50% to $7 in early trading on the New York stock exchange on Thursday after Coinbase’s announcement, before recovering slightly to $7.60. They had closed at $13.53 the previous day. At the peak of the crypto boom in late 2021, its stock price had hit an all-time high of $219.75.
The bank, which is more than 30 years old, shifted its entire business behind serving the
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