US-based Silvergate Bank has made a risk-based decision to suspend its crypto payments network amid growing operability concerns. The crypto-friendly bank has raised concerns about its ability to operate at the beginning of March 2023, as it delayed its annual report.

According to Reuters, Silvergate reported a USD 1 billion loss for the fourth quarter as investors raced to withdraw deposits in the wake FTX’s bankruptcy filing. At the time, Silvergate revealed that it would be unable to meet its extended deadline for submitting its annual report on 16 March 2023. It also revealed as part of a filing to the Securities and Exchange Commission that it had sold additional debt securities to repay debts.

The bank raised concerns about its ability to operate, which caused Coinbase and Galaxy Digital to drop Silvergate as their banking partner. As part of a risk-based decision, the bank has now discontinued the Silvergate Exchange Network. The news was delivered in the form of an announcement on the Silvergate website, which also informed that all other deposit-related services will remain operational.

The Silvergate Exchange Network was one of the bank's most important offerings as it facilitated transfers between investors and crypto exchanges around the clock, unlike traditional bank wires that can take days to settle. Silvergate’s investigation by the DOJ In February 2023, the US Department of Justice has reportedly started an investigation into Silvergate Bank due to its connection to FTX. According to coinpedia.

org citing a report by Bloomberg, the DOJ was investigation the bank’s dealings with FTX as it tried to unravel the FTX debacle. Silvergate Bank had not been accused of any wrongdoing, and the investigation was still in its early stages at the time. Silvergate was severely affected by FTX’s downfall in November 2022.

The bank reported a USD 1 billion loss and had to let go of 40% of its staff. Moreover, the entity’s representatives revealed that they took out billions of dollars in loans to stave off a run-on deposit after Bankman-Fried’s exchange collapsed. In early January 2023, Silvergate also disclosed that it held USD 4.

3 billion in short-term Federal Home Loan Bank advances and had about USD 4. 6 billion cash and cash equivalents at the end of 2022. According to Bloomberg, Silvergate was one of the multiple crypto-friendly banks that used the program originally set up under President Herbert Hoover to strengthen mortgage lending.

.