The California-based Silvergate bank warned in a filing last week that it might not be able to remain operational for the next twelve months, which led to a bank run where depositors rushed to move their funds elsewhere. With several noteworthy crypto companies severing ties with the bank, the company’s share price fell by over 60% and its future has since been in the doldrums. Once an essential banking partner for crypto-focused companies, the bank is now on the cusp of getting dissolved. Or is it?
Rumors Of Potential Bailout
There are rumors now circulating in the market that suggest Silvergate bank may have a chance of making a speedy comeback. This comes on the heels of few top institutions stepping in to bail out the failing bank. If rumors are to be believed, Citadel Securities could very well be at the top of the list of potential rescuers for the financially troubled bank. Some believe that the fact that Citadel owns a specific percentage of Silvergate’s shares is a sufficient justification for the company to step in. It’s speculated that Citadel owns a 5.5% stake in Silvergate bank.
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Market players also speculate that Signature Bank — which has replaced Silvergate as the preferred banking partner for the vast majority of cryptocurrency businesses — may have plans to acquire the bank. Although no official sources were cited, neither Silvergate nor others have denied the rumors. However, there are some deposits still left in the accounts, which could lend a few more weeks or months in order to survive and sort out the corporate proceedings. The total amount of deposits that remained with the bank as of Friday was reported to be around $168 million by sources inside Silvergate.
What’s Next For Silvergate If No Bailout?
In the event that Silvergate is unable to secure financial assistance, the company may be forced to declare bankruptcy and follow in the footsteps of FTX. But, because Silvergate is insured by the FDIC, the company may choose to go into “receivership”. This means that a “receiver” or trustee will be appointed to take control of the company with the intention of shielding its creditors, particularly those who have secured loans.
In the meantime, the Silvergate crisis has had a significant impact on the cryptocurrency market, which has resulted in a decline of about 5% in Bitcoin’s price over the previous week. As the market remains in disarray and reels under the uncertainty surrounding the bank, Bitcoin, for the most part, has remained flat over the past few days and is currently exchanging hands at $22,532.
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The post Silvergate Bank’s Future Still Alive? Will Potential Bailouts Save Crypto’s Favorite Bank? appeared first on CoinGape.
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