As the heat about the collapse of Silvergate continues to steam up, top cryptocurrency exchanges have denied having users’ assets on the struggling bank. In different Tweets today, both Binance and Coinbase debunked having their users’ assets on Silvergate.
In the early hours of today, the CEO of Binance, Changpeng Zhao described the crash of Silvergate as a big blow. However, he assured all users that Binance suffered no asset losses in the crash. In his Tweet, CZ expressed optimism that the liquidated firm is on course to return all deposits in full to its users.
Shortly after the post by CZ, popular crypto exchange, Coinbase also assured its users of the safety of their funds. The exchange insisted that it has no corporate cash or client with Silvergate. By virtue of this, Coinbase says no aspect of users’ asset will be affected by the decision of Silvergate to wind down its operations.
Recall that a few days ago, Coinbase stopped the initiation of payments from its network to Silvergate and vice versa. Worthy of note that the exchange took the decision following indications that the firm was at the brink of collapse. Meanwhile, Coinbase assured users about its commitment to continuously facilitate institutional client cash transactions with other banking partners.
More so, it took some proactive measures to ensure that users are not impacted by its decision to halt transactions to Silvergate. However, it described the troubled firm as a consistent partner and contributor to the development of the crypto industry.
Genesis of the crisis befalling Silvergate
It is noteworthy that Silvergate served as a banking partner to numerous crypto firms. However, following the collapse of FTX, the banking giant began to struggle financially. Occasioned by this development, investors reportedly withdrew $8 billion in deposits in late 2022. This thus made the firm to ensure a net loss of $1 billion in the fourth quarter.
Following indications that Silvergate is now struggling to sustain its business, its partners in the crypto industry began to take proactive measures. In light of this development, the likes of Paxos, Gemini, Coinbase and others halted their relationship with the bank. Just recently, the banking firm resolved to close down its exchange. It claimed the close down of the exchange manifested as part of its “risk-based decision.”
As the crisis continued to deteriorate, the Silvergate Capital Corporate, the parent firm of the banking giant announced the closedown of operations. In the announcement, the company said it took the tough decision following the recent industry and regulatory developments. However, it assures users of the repayment of their deposits in full.