Crypto-friendly bank Silvergate has seen its shares (SI) fall by over 44% shortly after news emerged that Coinbase will stop using its USD payment service.
Leading crypto exchange Coinbase informed its Primer users on March 2 that it has decided to change Silvergate as its banking partner.
Coinbase said it has moved to work with Signature bank for all USD-related payments.
“We are facilitating fiat withdrawals and deposits using Signature Bank, effective immediately” Coinbase said.
Coinbase has urged its Prime users to update their payment instructions to reflect Signature Bank details.
According to Coinbase, the update will not affect users’ crypto holdings or trading experience on Coinbase Prime.
Coinbase’s move to severe banking relationships with Silvergate may be linked to an ongoing investigation by U.S. authorities.
Trouble in Silvergate
In the wake of the FTX collapse, the U.S. Department of Justice moved to probe Silvergate for its alleged role in the FTX fallout.
Several U.S. senators had accused Silvergate of conducting business deals with FTX, despite having knowledge of the exchange’s mismanagement of customers’ funds.
At the end of the fourth quarter of 2022, Silvergate reportedly lost over $1 billion due to a sustained decrease in digital asset customers.
In addition, Silvergate failed to submit its annual 10-K report to the U.S. Securities and Exchange Commission (SEC) on March 1. As a result, the company’s share lost over 32% of its value to trade at $9.14.