Silvergate Bank Downgraded, Stocks Drop
The news of the termination of the partnership has led to a further drop in the stocks of Silvergate Bank. The bank's stocks were already under stress due to a delay in filing its annual 10-K report and have now dropped another 40% in pre-market trading. In light of the insolvency scare, Silvergate Capital was also downgraded to "underweight" from "neutral" by JP Morgan.
Investigations into Silvergate Bank
Silvergate Bank, known as the "crypto bank" for its association with several crypto partners, is under investigation by the U.S. Department of Justice. The investigation revolves around former FTX CEO Sam Bankman-Fried's account with the bank and its involvement in the collapse of the FTX crypto exchange.
In a separate civil lawsuit, Silvergate Bank and its CEO Alan Lane have been accused of "aiding and abetting" a "multibillion-dollar fraudulent scheme" orchestrated by Sam Bankman-Fried and his entities FTX and Alameda Research.
Impact on Other Currencies
Terminating the partnership will not impact payment instructions in pounds or euros. Coinbase will facilitate institutional client cash transactions for its prime customers with its other banking partner, Signature Bank.