Shares of cryptocurrency-related companies fell in premarket trading on Monday after Silvergate Capital Corp pulled the plug on its crypto payments network, following its doubts about keeping its business viable.
The digital assets-focused bank said late on Friday that effective immediately it had made a “risk-based decision” to discontinue the Silvergate Exchange Network (SEN). Shares of the La Jolla, California-based bank were down more than 4% in premarket trading, while crypto lending peer Signature Bank fell 3%. Crypto exchange Coinbase Global and BTC mining machine maker Ebang International were both down about 1% each.
“The crypto market reacted to the negative news from Silvergate Bank, with both Bitcoin and Ethereum down ~4.8% for the week,” analysts at brokerage Bernstein said in an industry note. A slew of crypto heavyweights including Coinbase Global and Galaxy Digital have dropped Silvergate as their banking partner after the lender’s latest filing raised questions about its ability to continue as a going concern.
Shares in Silvergate hit a record low of $4.86 on Friday, shedding nearly 98% of their value since their record close in November 2021 and wiping out more than $7 billion from the company’s market capitalization.
The firm has been struggling to stay afloat after the collapse of Sam Bankman-Fried’s crypto exchange, FTX, in November drove investors to pull out $8 billion in deposits from the bank in the last three months of the year. Silvergate reported a net loss of $1 billion in the fourth quarter.
