crypto-centric bank silver door said your exposure to the bankrupt lender Genesis has been limited.
The bank made this announcement in an update on Friday (Jan 20), one day after Genesis filed for bankruptcy and three days after Silvergate said the cryptocurrency industry's ongoing downturn had led to a billion-dollar loss.
“While this remains a turbulent time in the digital asset industry, Silvergate's exposure to Genesis is minimal and customer deposits are, and always have been, secure,” the company said.
“Silvergate’s deposit relationship with Genesis was less than $2.5 million as of both December 31, 2022 and January 19, 2023. Genesis is not a custodian of Silvergate’s bitcoin-collateralized SEN leveraged loans and Silvergate is not has no outstanding loans or investments in Genesis." the company said.
Genesis filed for bankruptcy on Thursday (Jan 19), seeking protection for itself and two of its lending business subsidiaries: Genesis Global Capital and Genesis Asia Pacific.
“While we have made significant progress in refining our business plans to address liquidity issues caused by recent extraordinary challenges in our industry, including the Three Arrows Capital default and the FTX bankruptcy, a restructuring in court files the most effective pathway through which to preserve assets and create the best possible outcome for all Genesis stakeholders”, Genesis Interim CEO here is islam he said in a press release.
Genesis, a unit of Digital Currency Group (DCG), owes its top 50 creditors about $3.4 billion. The bankruptcy filing said these creditors include lenders who were part of an agreement with the Gemini Trust, who are collectively owed about $766 million.
Silvergate, meanwhile, announced that it was cutting jobs and take other steps on Tuesday (January 17) to stay afloat amid the anticipation of reduced deposits following its $1 billion loss.
“During the fourth quarter of 2022, the digital asset industry underwent a transformative change, with significant over-leveraging in the industry, leading to several high-profile bankruptcies,” the company said in a press release. "These dynamics created a crisis of confidence across the ecosystem and led many industry participants to shift to a 'risk free' position on digital asset trading platforms."
PYMNTS noted on Sunday (Jan 22) that Silvergate and another crypto-centric bank, Signature Bank, allegedly turned to the federal mortgage system, borrowing billions to deal with a uptick in customer withdrawals.
Signature borrowed nearly $10 billion from the Federal Home Loans Bank system in the fourth quarter, the Wall Street Journal reported, while Silvergate borrowed $3.6 billion. Both banks saw an increase in cryptocurrency-related deposit outflows from clients last year.
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