Blockchain News

MicroStrategy, Tether Adds to Firms Distancing From Silvergate as Stock Dives 57%

MicroStrategy and Tether are the latest companies to disclaim any significant connection to Silvergate Bank. Once Silvergate stated on March 1 that it would postpone publishing its annual 10-K financial report, many speculated that the cryptocurrency bank was near insolvency. MicroStrategy, which has over 130,000 Bitcoin, confirmed that Silvergate does not retain their collateral.

The Michael Saylor-founded business noted that a bankruptcy or insolvency event would not “accelerate” Silvergate debt repayment until Q1 2025.Tether CTO Paolo Ardoino tweeted on March 2 that Silvergate does not affect Tether.Cryptocurrency bank failure might hurt the industry.

Silvergate, a fintech company, offers financial infrastructure solutions and services to the world’s leading cryptocurrency exchanges, institutional investors, and mining firms.

Silvergate Exchange Network, a 24/7 payments network, has processed over $1 trillion since 2017.

The company offers stablecoin infrastructure, digital asset custody, and collateralized lending to cryptocurrency sector institutions. Despite huge network effects, the late 10-K filing seems to have affected its collaborations.Coinbase, Circle, Bitstamp, Galaxy Digital, and Paxos said they will reduce their agreements with the cryptocurrency bank within 24 hours of the late 10-K filing.

Gemini also ceased taking Silvergate ACH and wire transfer deposits and withdrawals.,, Wintermute, GSR, and Cboe Digital have reportedly terminated connections.Binance’s spokesman told Cointelegraph that the exchange does not work with Silvergate or utilize its services.

As FTX collapsed in November, Silvergate announced a $1 billion net loss in Q4 2022, raising concerns about its finances.The US Department of Justice is investigating Silvergate and FTX’s operations, but no criminality has been found. On Feb. 14, plaintiffs in a proposed class-action lawsuit against FTX accused Silvergate of “aiding and abetting” a “multibillion-dollar fraudulent scheme” by former CEO Sam Bankman-Fried.

In Q4 2022, the bank processed over $3.8 billion in client deposits despite several corporations denying connection to Silvergate. Silvergate reported a sharp drop from $11.9 billion in Q3 2022.


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