US Bank About To Collapse Because Of FTX Scandal
Last Updated on 6 November 2023 by CryptoTips.eu
Consternation on the tech-heavy US Nasdaq stock market this week when Silvergate Capital, a Californian bank that has been in business for more than 30 years, announced that its clients had withdrawn a good $8 billion from their accounts in the last quarter.
As a result, Silvergate Capital shares fell 42% in one day.
Silvergate bank stock down 42% today and they just announced they’re laying off 40% of staff. Life (Sam) comes at you fast. pic.twitter.com/WBvSW79b0o
— Autism Capital 🧩 (@AutismCapital) January 5, 2023
The bank run happened after the collapse of crypto platform FTX, a major client of Silvergate Capital. As already reported several times by Cryptotips, the interdependence between Silicon Valley, the area in California where many technology companies have their headquarters, and the FTX group was quite large.
Crisis
Deposits from customers with digital assets fell from $12 billion at the end of the third quarter to about $4 billion, a drop of about 68%. The withdrawals intensified when crypto platform FTX, a major Silvergate client, went bankrupt. Now there are questions about the stability of the bank itself. Silvergate said there was a “crisis of confidence across the ecosystem.”
Amongst Silvergate's corporate banking customers, you can find the likes of Coinbase, Circle, Bitstamp, Kraken and Paxos. – Not good news for the crypto industry if Silvergate goes out of business. https://t.co/C3B64vmn90
— Arturo Portilla (@Arturo_P_A) January 5, 2023
In November 2021, when Bitcoin hit its all-time high, Silvergate bank stock was at $222. Now it is trading for about $10.
Several major US commercial banks have already warned that Silvergate could go bankrupt.
According to Democratic US Senator Elizabeth Warren, it was the Silvergate bank that allowed FTX to funnel billions to Alameda, the trading arm of the company run by Caroline Ellison, Sam Bankman-Fried’s former girlfriend. Warren has asked the bank to provide more information to help with the investigation.
