Binance, Coinbase, OKX Untethered by Silvergate Capital Shutdown

Sahana Kiran
Source – Forbes

Looks like the 2022 bad luck streak is being carried onto 2023 as well. Silvergate Capital and its controversial downfall is an intensively discussed topic on crypto Twitter. Silvergate Capital said earlier today that it was closing the bank and liquidating it. The company’s demise is seen as another domino in the FTX catastrophe, thus concern over the Silvergate contagion started to loom.

Soon after this news broke, cryptocurrency firms began reassuring the community about their condition. Binance’s CEO Changpeng Zhao tweeted that the world’s largest cryptocurrency exchange has no asset losses at Silvergate. Funds at the exchange are safe.

A slew of other firms also confirmed to the community that they weren’t impacted by the collapse of Silvergate. Coinbase denied having any client or corporate cash at the bank. The exchange wrote,

“We’re sorry to see Silvergate make the tough decision to wind down their operations. They were a partner & contributors to the growth of the crypto economy. Coinbase has no client or corporate cash at Silvergate. Client funds continue to be safe, accessible & available.”

Before Binance and Coinbase, OKX’s President Hong Fang affirmed that both “corporate and customer funds are safe.” However, Fang believes that the whole Silvergate debacle would slow down the process of cryptocurrency adoption.

Here’s why Silvergate might have collapsed

The popularity of digital assets is growing by the day. Despite this, there are limited banks that take cryptocurrency deposits. The Crypto Council for Innovation linked the downfall of Silvergate to regulators. The CEO of the council, Shelia Warren said,

“Discouraging banks from providing deposit accounts only exacerbates this problem by creating fewer options for any one sector to obtain banking services. The problem is not about crypto, but concentration risks.”

While prominent firms claim to be untethered by the collapse of Silvergate, fear continues to linger around the industry. Following its latest announcement, the stock price of Silvergate Capital Corp dipped by 5.76% to a low of $4.91.