Silvergate Bank, one of the leading banks in the cryptocurrency industry, has reportedly suspended its Silvergate Exchange Network (SEN) due to difficulties related to the collapse of the cryptocurrency industry. According to the announcement published on March 4th, Silvergate Bank, the latest name to be caught up in the liquidity crisis of the cryptocurrency industry, has decided to close its SEN – the network that transfers USD to cryptocurrency exchanges.
“With immediate effect, Silvergate Bank has decided to suspend operations with Silvergate Exchange Network (SEN). Other deposit services will continue as usual.”
As reported by AZCoin News, SEN is Silvergate’s main product to attract cryptocurrency partners, allowing these units to receive USD transactions from customers and convert them to currency on the exchange, as well as transfer money to each other. SEN has previously provided services to many major cryptocurrency exchanges in the US and around the world, including Coinbase, FTX, Kraken, Gemini, Bitstamp, Crypto.com, Binance.US; stablecoin issuers Circle, Paxos;…
However, since the FTX bankruptcy at the end of 2022, Silvergate has been heavily affected and has recorded up to $8 billion in withdrawals from the bank. As of the beginning of March, the bank announced to the SEC that it would not be able to submit financial reports on time because it was reassessing its operations, re-evaluating its assets, and may be facing investigations from the US government.
This news has raised concerns that Silvergate is sinking deeper into a crisis than previously estimated. In response to investors’ anxiety, Coinbase, Circle, Paxos, Gemini, Galaxy Digital, and others have announced the cessation of support for deposit and withdrawal transactions to Silvergate accounts, essentially severing ties with the bank.
The cryptocurrency market experienced a strong dump on March 3rd due to negative news from Silvergate. The situation of the cryptocurrency market in general and Silvergate Bank in particular is worth monitoring in the coming days, as the industry is facing a liquidity crisis that may have a major impact on the market.
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