Several claims have recently popped up concerning the financial condition of Silvergate Bank. The particular banking solution is based in the United States and is known for being a crypto proponent.
Due to the very nature and approach of the banking solution towards cryptocurrencies, several crypto firms have opened up their accounts there.
However, the concerns have started to gain heat as more and more claims are coming in about the possibilities of Silvergate.
Silvergate May Go Bankrupt
Multiple sources have come up with their own findings about the bank. However, many are claiming that the bank may end up filing for bankruptcy. This is because the bank might be facing a financial crisis.
If the financial conditions of the bank are not good, then it may indeed go with filing for bankruptcy. If that happens, then many crypto firms that have opened up their accounts with the banking solution will have their funds seized.
This would act as another major crash for the cryptocurrency industry and may act as an impact that the crypto industry cannot bear to withstand.
The currency situation of the cryptocurrency industry is not well. This means that if an event of the same scale as the FTX crash takes place, the crypto industry may crash.
With the rumors catching public attention, many cryptocurrency firms have started rushing to their accounts at Silvergate to withdraw their funds.
The cryptocurrency firms have been exiting the Silvergate Bank which may act as a chain reaction.
Impact on the Cryptocurrency Community
With the rumors gaining weight, major cryptocurrency firms such as Gemini, Coinbase, and Crypto.com have started to withdraw their funds from Silvergate.
Fearing another contagion, the investors have started to withdraw their funds from the respective exchanges.
This is what has triggered a selling spree in the cryptocurrency market that has pulled the entire crypto market valuation to lower levels.
Due to the recent selling spree, the overall crypto market valuation has dropped more than 1%. This is a huge deal for the crypto market given the fact that its valuation is over $1 trillion.
MicroStrategy Denies Significant Exposure
Being a proponent of cryptocurrencies, most of the crypto exchanges have opened up their accounts at Silvergate. This means that their funds are exposed to the particular entity.
If the bank files for bankruptcy, all these funds will be stuck and frozen, causing a major upset in the entire crypto industry.
Just like the crypto exchanges and other firms, the cryptocurrency communities shared their concerns about MicroStrategy.
There were claims that the business intelligence firm is exposed to the Silvergate bank as well. Many claimed that the exposure level of MicroStrategy to the particular bank is very high.
Michael J. Saylor, the founder, and CEO of the business intelligence company has denied these claims. He has clarified that the exposure of MicroStrategy to the Silvergate Bank is minimal.
Therefore, the Bitcoin community should not be worried about the situation and they can simply ignore it. Their exposure to the bank is close to nothing and the crypto industry must not be worried about that.
No Bitcoin Holdings at Silvergate
Saylor has even clarified that their Bitcoin holdings are not with the Silvergate Bank at all. All of their 130,000 BTC that is valued at $2.9 billion is in a different custody vault.
Those funds are safe and secure so nothing would happen to those Bitcoin. Saylor even clarified that they have not formed any kind of financial ties or partnerships with the bank for a while.
This is more of a reason for the BTC community to take a breath and not worry about the BTC in their possession at all.
The CTO at Tether, Paolo Ardoino, also tried clarifying the matter from their company’s end. He revealed that Tether (USDT) is not exposed to the Silvergate Bank so their customers should not be worried about that either.