• Circle responds to Silvergate concerns and is in the process of unwinding services.
• Silvergate Capital stock drops 45%, experiencing a year-to-date loss of 57%.
• Signature Bank and Coinbase stocks also drop following news.
Circle Addresses Concerns About Silvergate
Circle, issuers of the stablecoin USDC, responded to the ongoing FUD around its relationship with the distressed crypto bank Silvergate in a tweet on March 2. They said they are „sensitive to the concerns around Silvergate“ and they are currently in the process of discontinuing specific services while notifying customers.
Silvergate Stock Drops
On March 2, the stock of Silvergate Capital, the parent company of Silvergate bank, dropped after the bank postponed submitting its yearly 10-K report while assessing recent events that occurred after 2022. The firm experienced a decline of 45% at the end of the day and has since fallen by as much as 48.8%. Subsequently, its year-to-date loss extended to 57%. This was due to multiple obstacles that have been encountered since late last year such as inquiries from Department of Justice into transactions with FTX and Alameda Research.
Other Stocks Impacted
Signature Bank which also provides banking services to cryptocurrency startups was negatively impacted by this drop in Silvergate’s shares; reaching a 52-week low during the day and has since fallen further by approximately 6%. Following this news Coinbase stock also experienced a drop of approximately 7%.
In response, Circle stated that they are „in process of unwinding certain services with them and notifying customers.“ They acknowledged these concerns but did not give any additional information about what services would be discontinued or when customers will be notified.
Overall it seems that Circle is taking steps towards addressing these issues related to their relationship with Silvergate but it remains unclear what those steps are or how long it may take for them to be implemented. It is likely that other banks providing banking services for cryptocurrency companies may experience similar volatility until more details become available about this situation.