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Crypto stocks fall as Silvergate crisis deepens

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© Reuters. FILE PHOTO: Representations of cryptocurrencies are seen in front of displayed decreasing stock graph in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration

(Reuters) – Shares of cryptocurrency-related companies fell in premarket trading on Monday after Silvergate Capital (NYSE:) Corp pulled the plug on its crypto payments network, following its doubts about keeping its business viable.

The digital assets-focused bank said late on Friday that effective immediately it had made a “risk-based decision” to discontinue the Silvergate Exchange Network (SEN).

Shares of the La Jolla, California-based bank were down more than 4% in premarket trading, while crypto lending peer Signature Bank (NASDAQ:) fell 3%. Crypto exchange Coinbase (NASDAQ:) Global and BTC mining machine maker Ebang International were both down about 1% each.

“The crypto market reacted to the negative news from Silvergate Bank, with both and down ~4.8% for the week,” analysts at brokerage Bernstein said in an industry note.

A slew of crypto heavyweights including Coinbase Global and Galaxy Digital have dropped Silvergate as their banking partner after the lender’s latest filing raised questions about its ability to continue as a going concern.

Shares in Silvergate hit a record low of $4.86 on Friday, shedding nearly 98% of their value since their record close in November 2021 and wiping out more than $7 billion from the company’s market capitalization.

The firm has been struggling to stay afloat after the collapse of Sam Bankman-Fried’s crypto exchange, FTX, in November drove investors to pull out $8 billion in deposits from the bank in the last three months of the year.

Silvergate reported a net loss of $1 billion in the fourth quarter.

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