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Coinbase News: The largest crypto exchange in the United States, Coinbase Global Inc., recently announced that it has severed its connection with Silvergate Bank as its U.S. dollar banking partner; citing the continuing investigation as the reason behind the abrupt decision. Moving forward, the exchange will now facilitate cash transactions with Silvergate rival Signature Bank.
Coinbase Ditches Silvergate Bank
The revelation comes after Silvergate disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) on Wednesday that the company may have “less than well-capitalized” assets and that it was “reevaluating its business.” During the pre-market hours, the price of the shares dropped to an all-time low.
In a memo shared with its customers, the California-based exchange was quoted as saying:
Coinbase Prime has elected to make changes to our USD banking partners. We are facilitating fiat withdrawals and deposits using Signature Bank, effective immediately.
However, according to reports, Coinbase has minimal corporate exposure to Silvergate and therefore expects nominal or close to no impact. As of December 2022, the majority of the leading stablecoin issuers such as USDC, GUSD, TUSD hold some portion of dollar reserves at Silvergate Bank.
At Coinbase all client funds continue to be safe, accessible & available.
In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
— Coinbase (@coinbase) March 2, 2023
Read More: Check Out The Top 10 DeFi Lending Platforms Of 2023
The FTX Contagion
The failure of the FTX cryptocurrency exchange marked the beginning of the downward spiral for the fintech bank. The United States Department of Justice is currently conducting an investigation against Silvergate bank about its role in the failure of FTX. The bank was commonly referred to as the “crypto bank” due to the large number of crypto-focused companies that it caters to.
As a result of the ongoing investigations and the dissolution of partnerships, Silvergate has become one of the most shorted companies on the market at the present time. According to data provided by the Financial Industry Regulatory Authority, as of the end of January, short positions represented more than 72% of Silvergate Capital Corp stock.
In light of the recent Coinbase news, the share price of Coinbase fell by 4.9% in pre-market trade at the time of writing.
Also Read: Coinbase CEO Brian Armstrong Takes Jab At U.S. SEC, Asserts “Staking” Is Not A Security
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