Cryptocurrency companies down after Silvergate pulls plug

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Cryptocurrency companies down after Silvergate pulls plug

Shares of companies with cryptocurrencies fell in premarket trading after Silvergate Capital Corp pulled its plug on its services network because of its doubts about keeping its business viable.

The bank said late on Friday that it had made a risk-based decision to discontinue the Silvergate Exchange Network SEN Shares of the La Jolla, California-based bank, down more than 4% in premarket trading, while Signature Bank fell 3%. The exchange Coinbase Global and BTC mining machine maker Ebang International were both down about 1%.

The market for cryptocurrencies was negatively affected by the news from Silvergate Bank, with bothBitcoin andEthereum down 4.8% for the week, according to analysts at the brokerage Bernstein.

A number of heavyweights including Coinbase Global and Galaxy Digital have dropped Silvergate as their banking partner after the lender's latest filing raised questions about its ability to continue as a going concern.

Since their record close in November 2021, Silvergate's shares have fallen to $4.86, a record low for the company's market value, and wiped out more than $7 billion from the company's market value.

The firm was struggling to stay afloat after the collapse of Sam Bankman- Fried's FTX in November caused investors to withdraw $8 billion in deposits from the bank in the last three months of the year.

Silvergate reported a net loss of $1 billion in the fourth quarter.