Silvergate, a bank that focuses on providing services to cryptocurrency companies, dropped a shock bomb yesterday (2), saying that it is facing a dilemma of insufficient capital and is evaluating whether it can survive. Just as many companies in the industry have cut off their business relationships , MicroStrategy, the listed company with the most bitcoins in the world, pointed out that it has not entrusted any assets to Silvergate for custody.
In April last year, MacroStrategy used Bitcoin as collateral to borrow $205 million from the cryptocurrency bank Silvergate Bank to purchase more Bitcoin.
MicroStrategy posted on Twitter on Thursday that the company’s bitcoin collateral is not hosted by Silvergate, and that it has no financial relationship with the bank except for lending to the other party.
MicroStrategy added in the post that the loan will mature in the first quarter of 2025, but if Silvergate becomes bankrupt or insolvent during the period, the company does not need to repay the loan early.
Since Silvergate serves mostly cryptocurrency exchanges, institutional investors and mining companies, if the bank fails, it may have a serious impact on the cryptocurrency industry.
Silvergate’s most well-known service is the Silvergate Exchange Network, a year-round real-time payment platform, which has reportedly processed more than $1 trillion in transactions since 2017. Major users include Coinbase, FTX, Binance US, Circle, Paxos, etc.
However, since Silvergate expressed its operating concerns, customers such as Coinbase, Circle, Paxos, Crypto.com, Bitstamp, Cboe Digital Markets, Galaxy Digital, and Gemini have all made major moves to cut, saying that they will suspend their business relationship with Silvergate.
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