Embattled banking institution Silvergate has closed down its crypto payments network, which once formed the backbone of institutional crypto transfers.
“Effective immediately Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational,” said the firm in a statement posted to its website on Friday.
The Silvergate Exchange Network (SEN) is a 24/7 instant settlement service, used by the bank’s clients to facilitate corporate transactions. Before its woes began last week, Silvergate’s list of clients included major crypto exchanges such as Binance, Coinbase, Kraken and Gemini.
Of course, all these firms have now cut ties with Silvergate, following its disclosure of a probe led by the U.S. Department of Justice. Silvergate’s stock price also plummeted nearly 60% on Thursday.
As of January, SEN had processed $117 billion worth of transfer volume, despite a significant decline in deposits, said Silvergate CEO Alan Lane in a Q4 earnings call.
A day after the closure of SEN, crypto exchange ByBit suspended USD deposits via bank transfer, citing “service outages” with its end-point processing partner, but did not specifically name who that partner was.
Notice on Suspension of USD Payments via Bank Transfer
You may continue to make USD deposits via the Advcash Wallet, or buy cryptocurrencies with your credit card on our One-Click Buy page.
More details here: https://t.co/Roae3T4pYJ#Bybit #TheCryptoArk pic.twitter.com/XAUI2AeDJC
— Bybit (@Bybit_Official) March 4, 2023
The exchange urged users looking to make withdrawals via these methods to do so before midnight UTC on Mar. 10, after which the service will be suspended.
Bitcoin traded lower immediately after the Silvergate news on Friday, and has traded relatively flat all weekend.
📉 #Bitcoin's price drop a couple days ago, likely attributed to the #Silvergate share collapse, has had a tough time rebounding back. Our latest community insight discusses a potential $BTC support level to watch, and what could be in store for #altcoins. https://t.co/HMgIIuc5AD pic.twitter.com/i22qLhCLbV
— Santiment (@santimentfeed) March 6, 2023
Still, some market analysts believe that the negative effects of the news may already be priced in.
“It doesn’t look like the Silvergate issue is leading to broad contagion. And we may have seen most of the drop associated with that news already. I wouldn’t be surprised to see bitcoin retrace back down to $20,000, maybe even $18,000, to sort of retest those lows. But…it does look like the depths of the winter are behind us,” said Forex.com’s head of research Matt Weller to CoinDesk TV.