• Coinbase has dropped Silvergate as its payment partner and urged Prime users to update their payment instructions to Signature Bank.
• This move led to a 44% decrease in Value of Silvergate shares (SI).
• U.S Department of Justice is currently investigating Silvergate for its role in the FTX collapse.
Coinbase Severs Payment Partnership With Silvergate
Silvergate Shares Suffer 46% Loss
Leading crypto exchange Coinbase informed its Primer users on March 2 that it has decided to drop Silvergate as its banking partner, leading to the company’s share plummeting by over 44%. The abrupt change caused a significant reduction in the value of Silvergate shares (SI).
Investigation Into FTX Collapse
The reason behind Coinbase’s decision may be linked to an ongoing investigation by U.S authorities into the FTX collapse. Several U.S senators had accused Silvergate of conducting business deals with FTX, despite having knowledge of the exchange’s mismanagement of customers‘ funds. At the end of the fourth quarter of 2022, Silvergate reportedly lost over $1 billion due to a sustained decrease in digital asset customers, further compounding its troubles.
Update Payment Instructions To Signature Bank
Coinbase has urged Prime users to update their payment instructions to reflect details from Signature Bank – its new banking partner for all USD-related payments – saying that this update will not affect users‘ crypto holdings or trading experience on Coinbase Prime.
Failure To Submit 10-K Report To SEC
Adding insult to injury, Silvergate failed to submit its annual 10-K report to the U.S Securities and Exchange Commission (SEC) on March 1, causing a further 32% slide in share value down to $9.14 per share.
Coinbase’s decision has had serious consequences for Silvergate, with investigations into their alleged involvement in the FTX fallout continuing and losses mounting due to decreased digital asset customers and failure to submit 10-K report on time