LedgerX – cryptocurrency derivatives exchange and a subsidiary of the collapsed giant FTX – will reportedly cease its partnership with Silvergate Bank.
It urged users to receive wire transfers via the New York-based Signature Bank.
Switching to Another Partner
According to a Bloomberg coverage, LedgerX differentiated itself from the embattled financial institution focused on cryptocurrencies – Silvergate Bank. It advised customers to refrain from using it to receive domestic wire transfers from March 1.
LedgerX will double down on its existing partnership with Signature Bank, telling clients to employ the latter for such services.
Signature Bank said it will reduce its exposure to the cryptocurrency industry at the end of 2022 but not scrap it entirely. It ceased conducting fiat-to-crypto transactions worth less than $100,000 for Binance earlier this year.
“While we can’t comment on specific clients, we are still in the business of holding digital asset deposits,” Signature Bank said regarding the collaboration with LedgerX.
LedgerX is among the few surviving entities under the umbrella of the bankrupt behemoth FTX. It gained approval from the US Commodity Futures Trading Commission and was purchased by FTX US in October 2021. LedgerX even sought to register with the CFTC but withdrew its intentions shortly after SBF’s brainchild descended.
The exchange has grabbed the attention of several industry players who could be interested in its acquisition, including Gemini and Blockchain.com. Initial bids were due on January 25, while the final auction is scheduled for March 7.
Silvergate’s Issues
The hectic end of 2022, highlighted by the FTX bankruptcy in November, triggered a massive $1 billion loss for Silvergate Capital (the parent company of Silvergate Bank) in Q4. It also saw a decline in cryptocurrency customers: from 1,677 on September 30, 2022, to 1,620 at the end of December. Another primary factor that accounted for Silvergate’s problems was its $20 million exposure to BlockFi.
The crypto-related bank started off the year on the wrong foot, firing around 40% of its headcount and abandoning several projects.
In addition, US Senators Elizabeth Warren, Roger Marshall, and John Kennedy suspected Silvergate of having inside knowledge about the alleged FTX fraud.
“Both Congress and the public need and deserve the information necessary to understand Silvergate’s role in FTX’s fraudulent collapse, particularly given the fact that Silvergate turned to the Federal Home Loan Bank as its lender of last resort in 2022,” the politicians stated at the time.
Featured Image Courtesy of Crain’s New York Business
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