- Binance CEO says his exchange has no asset losses on Silvergate.
- Coinbase and OKX have also denied having any customer or corporate cash in the bank.
- Crypto Council for Innovation blames regulators for the fall of Silvergate.
Cryptocurrency firms rush to reassure the community of their condition following the collapse of cryptocurrency lender Silvergate Capital. The bank's controversial crash has become a hot topic on crypto Twitter and companies like Binance, Coinbase and OKX are using the giant social media platform to disassociate themselves from the contamination and avoid another domino effect like the one of the FTX holocaust.
Binance, Coinbase, and OKX Unaffected by the Silvergate Banking Catastrophe
It all started after Silvergate Capital revealed plans to shut down operations and voluntarily liquidate the bank, in a recent Twitter post.
The announcement sent shares of Silvergate Capital Corp tumbling 5.76% to as low as $4.91 on fear, uncertainty and doubt (FUD) continues to persist in the industry.
Following the announcement, cryptocurrency companies were quick to reassure their community members that they were not exposed to the Silvergate contagion. Binance CEO Changpeng Zhao, aka CZ, was at the forefront of this defense mechanism, saying that the world's largest cryptocurrency exchange has no asset losses on Silvergate, adding that "all funds are safe." .
CZ praised Silvergate for its commitment to fully return all deposits, based on its belief that user protection is paramount.
Cryptocurrency exchange Coinbase has also confirmed that it was not affected by the Silvergate collapse.
Coinbase has minimal corporate exposure to Silvergate.
โCoinbase (@coinbase) March 2, 2023
Denying that it has any client or corporate cash in the bank, an excerpt from the exchange statement reads:
We regret that Silvergate made the difficult decision to close its operations. They were partners and contributors to the growth of the crypto economy. Coinbase has no customers or corporate cash at Silvergate. Client funds continue to be secure, accessible and available.
The comment comes a week after Coinbase said it would no longer accept or initiate payments to or from Silvergate. Instead, they would switch to other banking partners for the facilitation of institutional client cash transactions. In particular, the exchange's client funds are held in FDIC-insured US banks.
At Coinbase, all customer funds continue to be secure, accessible, and available.
In light of recent developments and out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
โCoinbase (@coinbase) March 2, 2023
In particular, when a customer 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 an abundance of caution, with Chairman Hong Fang saying โboth corporate and client funds are safe.โ
Very sad to see this happen with Silvergate. Now, it will take longer for cryptocurrencies to reach more people.
Our corporate and client funds are safe. The team has done a great job managing risk and minimizing exposure. https://t.co/AYuv3oLvKg
โHong (@hfangca) March 8, 2023
However, the OKX executive believes that the entire Silvergate crisis would loosen the cryptocurrency adoption process.
Crypto Council for Innovation Blames Regulators for Silvergate Downfall
The Crypto Council for Innovation has linked regulators to the fall of Silvergate, arguing that despite the growing popularity of digital assets, very few banks accept crypto deposits.
According to the council's chief executive, Sheila Warren, โdissuading banks from providing deposit accounts only exacerbates this problem by creating fewer options for any sector to obtain banking services. The problem is not about cryptocurrencies, but about concentration risks."
