Bitcoin Drops Below $22,000 as Silvergate Situation Escalates
Bitcoin (BTC) has once again slid below $22,000 with significant events in the industry being the most probable cause.
Silvergate, a bank that has been friendly to the cryptocurrency industry, has announced that it will wind down operations and liquidate due to recent industry and regulatory developments.
The news has caused a 36% after-hours drop in the bank’s stock and pushed Bitcoin down from $22,100 to $21,700.
The bank has about $11 billion in assets and has assured that it will repay all deposits in an orderly fashion.
It is also shutting down its SEN platform, which allowed institutions to quickly swap crypto and cash 24 hours a day.
The news of Silvergate’s winding down has caused concern among industry players. The bank’s departure will likely create a gap in the market for crypto-friendly banking services. However, Signature Bank, another key banking partner in the industry, is expected to benefit from the fallout and gain new customers.
Silvergate’s decision comes after the collapse of FTX. This offshore Bahamas-based crypto exchange allegedly stole and gambled customer deposits by handing them to its hedge fund, Alameda Research.
The collapse of the exchange, with which Silvergate had partnered, has significantly impacted the bank’s operations. FTX is accused of fraudulently using customer deposits to fund its hedge fund, which has led to an ongoing legal battle with its founder, Sam Bankman-Fried.
FTX founder Sam Bankman-Fried is accused of being behind one of the largest financial frauds in history and faces up to 115 years in prison for various charges.