Coinbase disclosed that due to the claimed issues at Silvergate Bank, the cryptocurrency exchange would no longer accept or initiate payments with Silvergate.
Coinbase, a crypto exchange, has cut ties with Silvergate Bank due to ongoing investigations, and will no longer accept or initiate payments with them. The exchange announced in a tweet:
The crypto exchange also added that institutional client cash transactions will be facilitated through Coinbase’s other banking partner, Signature Bank.
Silvergate Bank’s stocks have already been under stress due to a delay in filing its annual 10-K report, and dropped 40% more in pre-market trading following the announcement from Coinbase. Additionally, JP Morgan downgraded Silvergate Capital from “neutral” to “underweight” due to the insolvency scare.
The investigations into Silvergate Bank began in tandem with the downfall of the FTX crypto exchange, and the bank is currently under investigation by the U.S. Department of Justice over its involvement in the FTX collapse.
Furthermore, Silvergate Bank and its CEO have been accused of “aiding and abetting” a “multibillion-dollar fraudulent scheme orchestrated by Sam Bankman-Fried” and two of his entities. As a result of these investigations and terminated partnerships, Silvergate became one of the most shorted stocks in the market.
The crypto industry has disassociated itself from Silvergate in addition to Coinbase. Numerous cryptocurrency companies, including Circle, Paxos, Galaxy, and CBOE, have halted some of their services and are informing their customers.