Will the Silvergate fiasco impact blockchain investments in 2023?

One of the largest #Crypto banks in the world, Silvergate Capital, recently disclosed it is winding up its business, on the back of several bankruptcies in the blockchain space, such as FTX and 3AC. πŸ“‰

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Last week, the company closed the Silvergate Exchange Network (SEN) – a payment and settlement platform designed to enable fast, secure, and low-cost transfers of fiat currencies between participating cryptocurrency exchanges and their customers. More than 90 cryptocurrency exchanges were part of the SEN. πŸ’Έ 

Several legislators also raised questions after Silvergate did not catch any suspicious transactions between FTX and Alameda Research, the latter’s sister trading arm. Silvergate held over $1 billion in FTX deposits, while close to $9 billion of customer funds went missing from FTX. πŸ’΅

Moreover, Silvergate customers withdrew $8 billion πŸ’° worth of deposits, forcing the bank to apply for a loan of $4.3 billion from the home bank loan system. This loan is viewed as a last resort which first raised liquidity concerns regarding the company. It was also stated that Silvergate Capital maintained $1.4 billion in cash when their demand deposits were exceeding $13 billion. ⬆️

Shares of Silvergate were down ⬇️ over 35% in early market trading on Thursday March 9th, and investors speculate this collapse could further decelerate investments in the #Blockchain and #Web3 verticals. The crypto winter drove Web3 investments lower by 74% year over year to $2.4 billion in the Q4 of 2022, according to a Crunchbase report. πŸ‘€