Silvergate Capital plans to shut down its crypto-enabled bank; storage tanks

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Silvergate Capital Corp. SI, -5.76% shares plunged more than 30% in after-hours trading on Wednesday after the company announced plans to halt operations and voluntarily liquidate its subsidiary Silvergate Bank, a lender cryptography friendly.

The slump in stocks would take it to a record high if losses hold steady in regular trading on Thursday.

The La Jolla, Calif.-based lender made the announcement after saying in a regulatory filing last week that it was at risk of being less than well capitalized and halted its crypto payments network.

As one of the few crypto-friendly banks, the liquidation of Silvergate Bank indicates uncertainty in the future relationship between crypto companies and banks, which play a critical role in converting fiat currencies into crypto.

Read: Crypto traders may lean towards stablecoins after Silvergate shuts down crypto payments network

Silvergate Banks’ liquidation plan includes the full repayment of all deposits, according to a statement released Wednesday.

The company is considering how best to resolve the claims and preserve the residual value of its assets, Silvergate Capital said. All other services related to the company’s deposits remain operational, he said.

Silvergate also said it hired Centerview Partners as financial advisor and Cravath, Swaine & Moore LLP as legal counsel.

Several crypto companies, such as Coinbase Global Inc. COIN, +1.81%, Galaxy Digital, Paxos, and Circle, said last week that they would cease all or part of payment transactions with Silvergate Bank.

Silvergate representatives did not immediately respond to a request for comment.

Signature Bank SBNY, -1.47%, another crypto-friendly lender, saw its shares fall 3.7% in after-hours trading on Wednesday.

Major cryptocurrencies were flat on Wednesday. Bitcoin BTCUSD, -1.31% fell 0.3% to around $21,981, while ether ETHUSD, -0.92% gained 0.2% to around $1,550, according to data from CoindDesk.

Read: Here’s the real challenge facing Silvergate and other crypto banks, says this short seller

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