Coinbase and Paxos Terminate Relationship With Silvergate Bank
- Both crypto exchange Coinbase and stablecoin issuer Paxos have stated that they will no longer accept or initiate U.S. dollar payments through Silvergate Bank.
- The two noted that cash transactions for institutional clients will now be carried out through their other banking partners, and that the move had no impact on pound and euro payments.
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Cryptocurrency exchange Coinbase has terminated its partnership with Silvergate, and will no longer facilitate dollar payments through the troubled bank, the company said via Twitter on 2 March.
According to the announcement, Coinbase decided to switch away from Silvergate Bank’s services in light of “recent developments” and out of an “abundance of caution” for its institutional clients funds. The company noted that U.S. dollar-based transactions for institutional clients will now be carried out through its other banking partner, Signature Bank. The company tweeted:
Coinbase also added that the decision will have no impact on payments in pounds or euros, and that the exchange had minimal exposure to the crypto-focused bank. The announcement send the stock price of Silvergate — which was already under pressure due to a delayed 10-K annual filing — down by more than 40%.
Coinbase is not the only company to end its relationship with Silvergate today. Stablecoin issuer Paxos also announced via Twitter that it will discontinue all SEN transfers and wires to Silvergate accounts, and noted that it did not have “any material exposure” to the bank.
Silvergate’s troubles began with the fall of cryptocurrency exchange FTX, and the crypto-focused bank is now facing an investigation from the U.S. Department of Justice for its involvement in the collapse of FTX. Another lawsuit accuses Silvergate and its CEO Alan Lane of “aiding and abetting” a multibillion-dollar fraudulent scheme orchestrated by the former CEO of FTX, Sam Bankman-Fried.
- NYDFS took possession of Signature in order to protect the economy and strengthen the confidence in the banking system, and assured customers that all deposits will be returned.
- The price of USDC also started to recover after its issuer, Circle, revealed that all stablecoin reserves held at Silicon Valley Bank (SVB) were safe, and that the company had new banking partners.
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- Coinbase has launched the testnet for its own layer-2 network Base, which was designed to be low-cost, open-source, and provide a developer-friendly environment.
- The exchange also revealed it will be joining Optimism as a core developer on the open-source “OP Stack”, which Base was built on top of.
- SBF’s defense is already looking into, and contacting possible independent technical experts to advise the court on his bail terms.
- The proposal for a technical advisor was made last week, when prosecutors asked for tighter bail conditions due to SBF’s use of VPN and encrypted messaging apps.