Silvergate, the crypto bank, has announced the discontinuation of its digital assets’ payment network, the Silvergate Exchange Network (SEN), citing a “risk-based decision.”
The move comes after the bank’s stock fell over 59% in the past five days due to concerns about a potential bankruptcy.
However, all other deposit-related services remain operational. In another development, United States Judge Michael B. Kaplan ordered Silvergate to return $9,850,000 deposited by crypto firm BlockFi.
The bank has been struggling with liquidity issues due to the crypto bear market and significant outflows in the fourth quarter of 2022, leading to a $1 billion net loss.
The bank reportedly borrowed $3.6 billion from the U.S. Federal Home Loan Banks System (FHLB) to mitigate the effects of a surge in withdrawals.
However, fears that a liquidity crisis could result in bankruptcy protection spiked this week after Silvergate postponed the filing of its annual 10K financial report.
In response, several crypto firms, including Coinbase, Circle, Bitstamp, Galaxy Digital, and Paxos, announced they will scale back their partnerships with the bank in some capacity.
