Cryptobank Silvergate’s collywobbles could add to the industry’s woes

Another huge cryptocurrency company bit the dust this week, leading some analysts to predict bigger problems for the overall ecosystem.

Silvergate Capital, a publicly traded crypto bank, announced Wednesday that it would “wind down and voluntarily liquidate” its banking division.

The news from the California-based company followed a run that resulted in asset sales at a huge loss to cover more than $8 billion in withdrawals amid the broader collapse of the crypto ecosystem.

“It’s not the first bank to get the collywobbles,” Katharine Wooller, business unit director at Coincover, told CoinTech. “Ultimately, despite increasing scrutiny, the risk/reward ratio was not viable as the ongoing crypto winter, exacerbated by the FTX scandal, shows no signs of thaw.”

As the company says goodbye to its nearly 10-year crypto experiment, it points to a bigger problem for the ecosystem. The institution, which was one of the few banks to act as an intermediary for institutional crypto, is yet another victim of the “crypto winter” following the implosion of FTX, which the bank used to transfer client funds.

While the news feels big, “market participants seem to be shrugging it off,” said Julius de Kempenaer, senior technical analyst at The number of providers of the crypto ecosystem is declining, which could become a bigger problem if this trend continues, he added.

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