Another massive crypto-centric The firm bit the dust this week, leading some analysts to predict bigger issues for the wider ecosystem.
Silvergate Capital, a publicly traded crypto bank, announcement Wednesday that it would “reduce operations and voluntarily liquidate” its banking division.
News from the California-based company followed a run that saw it sell assets at a huge loss to cover more than $8 billion in withdrawals amid the broader collapse of the crypto ecosystem.
“It’s not the first bank to have the collywobbles,” Katharine Wooller, business unit manager at Coincover, told TechCrunch. “Ultimately, the risk/reward ratio, in the face of increasing scrutiny, was unsustainable as the ongoing crypto winter, compounded by the FTX scandal, shows no signs of thawing.”
As the company bids farewell to its nearly 10-year crypto experiment, it points to a bigger problem for the ecosystem. The institution, which was one of the few banks to have acted as a middleman in the institutional crypto space, is yet another victim of the “crypto winter” following the implosion of FTX, which used the bank to transfer customer funds.
Although the news seems important, “market participants seem to ignore it,” according to Julius de Kempenaer, senior technical analyst at StockCharts.com. The number of vendors in the crypto ecosystem is shrinking, which could become a bigger problem if this trend continues, he added.