Coinbase (NASDAQ: COIN) has announced it is discontinuing its business relationship with Silvergate (NYSE: SI), a crypto-friendly bank that is looking increasingly in trouble following the crypto winter and the collapse of FTX.
On Thursday, Coinbase said it will no longer accept or initiate payments with the bank and that going forward, it will facilitate cash transactions for its institutional customers using other banks. On why the switch from Silvergate, Coinbase noted the decision was “in light of recent developments and out of abundance of caution.”
The crypto exchange maintained it has very minimal exposure to Silvergate, whose shares plunged on Thursday as uncertainty around it swelled.
Stablecoin issuer Paxos is also switching frok the crypto-focused bank, announcing today that it had discontinued its use of Silvergate’s payment network (SEN). Like Coinbase, Paxos cited “recent developments” as the reason for its action. The US-based company tweeted:
“In light of recent developments with Silvergate Bank, Paxos has discontinued all SEN transfers and wires to our Silvergate account. Paxos will continue to process all outgoing payments.”
Silvergate shares plummet
Shares of Silvergate are trading around $7.49, more than 44% down at 11:40 am ET on Thursday. SI is down nearly 66% in the past 30 days, with the latest plunge coming after news that the bank might not be “well capitalized.”
The crypto bank revealed this in a SEC filing on Wednesday.
COIN stock has also dipped amid the broader negative sentiment, with its value at $60.10 at the time of writing.
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