March 2 (Reuters) – Cryptocurrency exchange Coinbase Global Inc (COIN.O) on Thursday cut financial ties with Silvergate Capital Corp (SI.N) and said it was too little business for the lender, whose latest filing raised questions about its ability to stay. in business.
Coinbase said it will partner with other financial institutions to facilitate cash transactions for customers who have parked funds with the exchange, and that it has stopped accepting or initiating payments to and from Silvergate.
Silvergate shares nearly halved after the announcement from Coinbase to $7.06 in early morning trading. Coinbase shares fell nearly 7% to $60.12.
The crupto exchange’s decision comes as Silvergate seeks to chart a path out of the liquidity crunch that it has plunged into after last year’s FTX bankruptcy that has led its clients to withdraw billions of dollars in deposits.
On Wednesday, Silvergate delayed its annual report and said it sold additional debt securities — investments that can include bonds and securities — to pay down debt this year and was assessing the impact of those events on its “ability to continue as a going concern.”
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The bank has also become a target for short sellers. Silvergate’s short interest is estimated at 22.6 million shares, or 82% of the shares floating, making it the most shorted stock in the US by percentage float, according to data from analytics firm S3 Partners.
Founded in 1988, Silvergate is one of the most influential banks in the digital asset industry and entered the crypto space in 2013.
Along with Coinbase, Kraken is also one of its major customers.
Additional reporting by Nikit Nishant in Bengaluru; Editing by Uttarish Venkateshwaran, Sriraj Kaluvella and Anil D’Silva
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