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Analysts said a complete closure of the crypto lender could take one or two years depending on how quickly outstanding loans are repaid and assets are disposed of.
Silvergate’s latest move adds to a list of high-profile collapses among crypto market players since last year.
The company’s shares plunged 37% to $3.11, a day after hitting a record low and have lost 64% since March 1 when the company flagged a going concern risk.
“We believe this decision was made, at least in part, to help mitigate Silvergate Bank’s legal liability related to FTX’s bankruptcy,” Wedbush analysts wrote in a note.
Silvergate did not immediately respond to a request for comment on the analysts’ view.
Meanwhile, shorting in the shares of Silvergate has proved profitable for bearish investors as its shares have lost 95% of their value in the past 12 months and 72% so far this year.
Nearly 85% of the company’s free float is under short position with short sellers making $241 million in year-to-date mark-to-market profit, according to analytics firm S3 Partners.
Shares of peer Signature Bank (NASDAQ:SBNY), which has been pivoting away from crypto since late last year, fell 8%.
In its second mid-quarter update this month, Signature said digital assets accounted for just 18.5% of its total deposit balance.
Crypto exchange Coinbase (NASDAQ:COIN) Global, which cut ties with Silvergate last week, dipped nearly 1%. Miners Riot Blockchain (NASDAQ:RIOT) and Marathon Digital slid 2.3% each.
Bitcoin steadied at $21,711, near its lowest level since mid-February, with analysts and investors saying the market impact of the news was limited as it was widely expected.
