Cryptocurrency exchanges

Cryptocurrency exchanges reassure saftey after Silvergate bank shuts down

  • Binance CEO says his exchange has no asset losses at Silvergate.
  • Coinbase and OKX have also denied having any client or corporate cash at the bank.
  • Crypto Council for Innovation blames regulators for the Silvergate downfall.

Cryptocurrency firms are rushing to assure the community about their condition following the collapse of struggling crypto lender Silvergate Capital. The bank’s controversial downfall has become a hot topic on crypto Twitter and the likes of Binance, Coinbase, and OKX are using the giant social media platform to dissociate themselves from contamination and avoid another domino effect like that of the FTX holocaust.

Binance, Coinbase, and OKX were unaffected by the Silvergate bank catastrophe

It all started after Silvergate Capital disclosed plans to wind down operations and voluntarily liquidate the bank, in a recent Twitter post.

The announcement sent Silvergate Capital Corp’s stocks down 5.76% to a low of $4.91 as fear, uncertainty, and doubt (FUD) continues to linger around the industry.

Following the announcement, cryptocurrency firms sprinted to reassure their community members that they had no exposure to the Silvergate contagion. Binance CEO Changpeng Zhao, aka CZ, was at the forefront of this defense mechanism, saying the world’s largest crypto exchange has no asset losses at Silvergate, adding, “all funds are safe.”

CZ went on to laud Silvergate for their commitment to fully return all deposits, based on his belief that user protection is principal.

Cryptocurrency exchange Coinbase has also confirmed that it was not affected by the Silvergate collapse.

Coinbase has de minimis corporate exposure to Silvergate.

— Coinbase (@coinbase) March 2, 2023

Denying having any client or corporate cash at the bank, an excerpt from the exchange’s statement reads:

We are sorry to see Silvergate make the tough decision to wind down their operations. They were a partner and contributors to the growth of the crypto economy. Coinbase has no client or corporate cash at Silvergate. Client funds continue to be safe, accessible, and available.

The comment comes a week after Coinbase said it would no longer be accepting or initiating payments to or from Silvergate. Instead, they would shift to other banking partners for institutional client cash transaction facilitation. Notably, the exchange’s client funds are held at FDIC-insured US banks.

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

Notably, when a client has a large Dollar balance, Coinbase stores their cash in a US government money market fund to keep it safe and liquid.

Crypto exchange OKX has also denied exposure to Silvergate out of caution, with President Hong Fang saying both “corporate and customer funds are safe.”

Very sad to see this happening with Silvergate. It will now take a longer time for crypto to reach more people.

Our corporate and customer funds are safe. Team have done a great job of managing risk and minimizing exposure.

— Hong (@hfangca) March 8, 2023

Nevertheless, the OKX executive believes the entire Silvergate crisis would slacken the crypto adoption process.

Crypto Council for Innovation blames regulators for the Silvergate downfall

The Crypto Council for Innovation has linked regulators to the Silvergate downfall, arguing that despite the growing popularity of digital assets, very few banks accept crypto deposits.

According to the council’s CEO Sheila Warren, “Discouraging banks from providing deposit accounts only exacerbates this problem by creating fewer options for any one sector to obtain banking services. The problem is not about crypto, but concentration risks.”

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