Crypto’s favorite bank, Silvergate, may be about to surprise the Cryptocurrency market with a comeback after rumors of a possible bailout promising to secure Silvergate’s future. The bank, which has been on its deathbed for the last couple of months, had few chances of surviving, with its share prices continuously dropping.
In a filing done just a week ago, The California-based bank sadly reported that it might be unable to stay operational for the next few months. The bank indicated signs of scaling down its operations when it discontinued its primary product Silvergate Exchange Network. The decision was prompted by the need to reduce risks users might face during currency exchange and trade.
This report catapulted the fall of Silvergate as bank account holders hurried to transfer their deposits to other banks that were more reliable. Silvergate, once the banking partner of several major players in the cryptocurrency industry, including Coinbase Global, has been abandoned by many of these companies.
The bank’s lifeline is hanging by a thread after numerous notable crypto corporations deserted the bank, causing the bank’s share prices to fall by more than sixty percent.
Probable Bailouts Might Save Silvergate Bank
Recently, rumors have surfaced in the crypto market that proposes Silvergate bank might be on its way to recovering after the crisis that began last year. Furthermore, rumor has it that prominent corporations and institutions have stepped in to rescue Silvergate from impending doom.
Citadel Securities is one of the prominent institutions rumored to have bailed out Silvergate Bank. After digging, investigations revealed that Citadel Securities owns about 5.5% of shares in Silvergate. This information helped fuel the already raging rumor.
The report further asserted the speculation that Citadel Securities decided to bail out the failing bank at its eleventh hour because of share ownership. More speculations arose stating that Signature Bank, now Silvergate” s potential successor, may be planning to obtain the bank.
In addition, Signature Bank has recently been the preferred go-to for banking services for several crypto companies ever since the collapse of Silvergate. While no official sources have been cited, none of the involved parties have made reports denying the rumors.
Nonetheless, the troubled bank still has some remaining deposits that may allow it to endure and resolve its corporate proceedings for a few more weeks or months. According to insiders at Silvergate, the total amount of deposits still held by the bank as of Friday last week was about hundred and sixty-eight million dollars.
Silvergate’s Fate if Bailout Fails
The crypto world is curious about Silvergate’s next action if a bailout is not provided. In case of failure to receive financial assistance to save the bank, Silvergate Bank might be required to declare bankruptcy just like FTX did last year.
Alternatively, since FDIC insures Silvergate, it may enter into “receivership.” In this case, the trustee or “receiver” would be appointed to take charge of the company to protect its creditors, especially creditors with loans. Meanwhile, the Silvergate Crisis has significantly impacted the crypto market.
The Silvergate Crisis has dropped Bitcoin prices by roughly five percent in the past week. Although Bitcoin has faced the effects of the crisis and its market is still uncertain and turbulent, BTC has since remained fairly stable recently and is currently trading at twenty-two thousand five hundred and thirty-two million dollars.