Signature Bank stock drops 10% as Silvergate prepares to close

Shares of Signature Bank fell on Thursday after Silvergate, another top bank for crypto businesses, announced plans to halt operations.

Signature’s stock price fell more than 10% to around $92.40 per share, its lowest price in more than two years. Silvergate’s stock price fell more than 20% to around $3.88.

Silvergate Capital Corporation, the holding company of Silvergate Bank, cited “recent industry and regulatory developments” in its announcement Wednesday that the California-based bank would voluntarily go into liquidation.

The bank said it plans to repay bank deposits to customers in full. The announcement came after Silvergate said it would shut down its Silvergate Exchange Network (SEN), a 24-hour settlement service used by its customers.

Over the past week, several native companies in the digital asset industry have stepped aside of Silvergate. At least four cryptocurrency exchanges, including Coinbase and Gemini, have said their relationship with Silvergate will change as well as stablecoin issuers Circle and Paxos.

Investment firm Galaxy Digital has warned that it has stopped accepting or initiating transfers to Silvergate. Companies like Attached And MicroStrategy– which has the largest Bitcoin hoard among public companies – took to Twitter to allay fears about their potential exposure to the bank shutdown. MicroStrategy received a $205 million loan from Silvergate last March.

Silvergate’s stock price has been in freefall since the bank delayed filing its annual financial report with the Securities and Exchange Commission last week, signage it suffered more losses in the final quarter of last year than previously reported.

In its initial revenue report, Silvergate said it had $11 billion in total assets at the end of last year. For the same period, Signature said it had $110 billion in total assets, according to the New York-based bank’s latest report. Press release.

Silvergate’s decision to shut down has caused cryptocurrency prices to plummet. Ethereum and Bitcoin fell 1.6% and 2.5%, respectively, on Thursday.

Although Silvergate’s troubles could lead to more firms tapping Signature as a crypto-familiar banking partner, Thursday’s declines suggest investors are wary of banks that are more broadly involved in the asset class.

Last month, Signature was to hit with a class action lawsuit regarding his prior relationship with bankrupt cryptocurrency exchange FTX, which alleged that Signature “had actual knowledge of the now infamous FTX fraud and significantly facilitated it.”

Last year, Signature said it planned to reduce its exposure to the digital asset industry by decreasing bank deposits for crypto firms. The bank reaffirmed that the priority in a statement released on Wednesday.

“We have repeatedly communicated that our relationships in the digital asset space are limited to US dollar deposits only,” said Eric Howell, President and COO of Signature. “We remain fully committed to executing our plan to deliberately further reduce these deposits.”

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