Circle says it is ‘sensitive’ to concerns around Silvergate as share prices crash
"We are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers."
Circle acknowledged the concerns regarding Silvergate and said it is currently in the process of discontinuing specific services with them while simultaneously informing customers.
Circle, issuers of the stablecoin USDC, responded to the ongoing FUD around its relationship with the distressed crypto bank Silvergate in a tweet on March 2.
“We are sensitive to the concerns around Silvergate and are in the process of unwinding certain services with them and notifying customers.”
On March 2, the stock of Silvergate Capital, the parent company of Silvergate bank, dropped after the bank postponed the submission of its yearly 10-K report while assessing recent events that occurred after the conclusion of 2022.
The firm, which offers banking solutions to cryptocurrency companies, experienced a decline of 45% at the end of the day, having dropped by as much as 48.8% earlier. Consequently, its year-to-date loss extended to 57%.
In a statement released on Wednesday, Silvergate cited the need for additional time for its auditing firm to finish specific audit procedures, stating that it is “currently reviewing particular regulatory and other inquiries and investigations.”
Since late last year, Silvergate has encountered multiple obstacles in the aftermath of the FTX cryptocurrency exchange’s downfall. In January, the bank experienced a 40% decline in a solitary day after revealing significant fourth-quarter withdrawals in the wake of the FTX collapse. Subsequently, in February, the Department of Justice launched an inquiry into Silvergate’s transactions with FTX and its affiliated business, Alameda Research.
Signature Bank, which also provides banking services to cryptocurrency startups, was negatively impacted by the drop in Silvergate’s shares. Signature Bank’s stock reached a 52-week low during the day and has since fallen further by approximately 6%.
Following the news, Coinbase stock also experienced a drop of approximately 7%.
In a statement, the cryptocurrency services company stated that it has minimal corporate exposure to Silvergate and has ceased accepting or initiating payments to or from the bank. Similarly, hedge fund Galaxy Digital and stablecoin issuers Circle and Paxos have implemented the same action.
Cirlce says that it maintains relationships with a variety of banking partners, not just Silvergate, and that “all Circle services, including USDC are operating as normal.”