Five Things to Know in Crypto Today: Silvergate Bank Sinks Crypto

Key Insights:

• Silvergate Bank dominated the crypto news wires on Friday, with fears of a collapse sending the crypto market into a tailspin.
• Binance remained a market focal point following the news of US lawmakers targeting the world’s leading crypto exchange.
• Bitcoin (BTC) mining was back in the spotlight as the US anti-crypto drive intensified.

Silvergate Bank Sends Crypto Market into a Tailspin

On Friday, the total crypto market cap tumbled to a low of $969.75 billion, the largest drawdown since February 9. Investor jitters over a possible collapse of Silvergate Bank hit the crypto market in the early hours of Friday (UTC).

A whopping $52 billion came off the table within the first two hours of the Friday session. News of crypto clients cutting ties with Silvergate Bank shook investor sentiment. Leading crypto exchanges, including Coinbase, Crypto.com, Paxos, and Bitstamp, announced suspensions of business with the crypto-friendly bank.

The Thursday announcements came in response to Silvergate Bank delaying filing its annual reports on Wednesday. In the Wednesday announcement, Silvergate Bank cited the reasons for the delay.

However, one statement likely led to crypto platforms suspending Automated Clearing House (ACH) transfers and other business transactions.

“The Company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements.”

Silvergate Bank provided details of the ‘events’ that included the sale of additional investment securities that will result in further losses and the repayment of outstanding advances from Federal Home Loan Bank.

In the unaudited financial results for Q4 and the full year ending December 31, 2022, the bank reported a net loss attributable to common shareholders of $948.7 million versus a net income of $75.5 million.

Silvergate Capital Corp (SI) saw its share price tumble from a Wednesday opening price of $14.32 to a Friday low of $5.15 (64.04%).

Binance Pushes Ahead with Voyager Digital Deal

On February 22, the SEC and the New York Department of Financial Services (NYDFS) objected to the Binance.US acquisition of Voyager. News of Binance.US planning to acquire Voyager eased contagion risk in late 2022, supporting the bullish start to 2023.

On Friday, Binance CEO CZ announced support for the acquisition despite increasing scrutiny of the platform’s business practices. CZ had this to say on the deal,

“We are still in support of the deal and helping returning funds to users as quickly as possible if allowed to do so.”

The Binance CEO also shared a piece covering presiding judge comments relating to the SEC objection, highlighting the SEC’s failure to provide specific arguments to the objection.

On Wednesday, US lawmakers looked to turn the screw on Binance by sending a letter to Binance CEO CZ calling on Binance to share ‘information regarding growing concerns over the finances, risk management, and regulatory compliance of Binance, Binance.US, and other related entities.’

The letter went on to say,

“Meanwhile, what little information about Binance’s finances is available to the public suggests that the exchange is a hotbed of illegal financial activity that has facilitated over $10 billion in payments to criminals and sanctions evaders.”

In a bearish week for the crypto market, binance coin (BNB) is down 6.25% versus a BTC loss of 5.16%.

Bitcoin (BTC) Mining Returns to the Spotlight Amidst Anti-Crypto Drive

On Friday, US Senator Ed Markey and Representative Jared Huffman announced legislation to crack down on crypto energy consumption ahead of the ‘first-ever Senate hearing focused on the urgent need to crack down on the growing environmental impacts of crypto mining.’

Senator Markey had this to say,

“The crypto industry is growing, and so is a plume of pollution around their mining facilities.”

Adding,

“Crypto miners are sucking megawatt after megawatt from our public grids and emitting skyrocketing greenhouse gasses, just so that they can make a buck for themselves.”

In January 2022, a Congress sub-Committee discussed crypto mining and the environment. Impact studies of crypto mining on the environment have given mixed results.

CoinShares questioned scathing US government Bitcoin mining statistics noting that the Bitcoin mining network emitted 39 Mt of CO2 in 2021.

CoinShares provided some numbers for comparative purposes, including CO2 emission numbers from other industries. The banking system reportedly emits 130 Mt of CO2 annually, with the gold industry between 100 and 145 Mt of CO2.

EOS Bucked a Bearish Friday

EOS (EOS) is among a handful of cryptos that looks set to avoid the red on Friday. The upside came in response to news of EOS planning to launch the EOS Ethereum Virtual Machine (EVM). EOS Foundation CEO Yves La Rose claimed that the EOS EVM would be the fastest EVM, benchmarked three times faster than Solana (SOL) and BNB and 25 times faster than AVAX.

In the final hour of the Friday session (UTC), EOS was up 6.70%. The crypto market cap was down of 4.13%.

Tether and Stablecoins Remain Under Scrutiny

On Friday, Tether called a Wall Street Journal report wholly inaccurate and misleading. The Wall Street Journal has accused Tether of falsifying documents and using shell companies to open bank accounts.

This morning, TetherUSD (USDT) remained stable at $1.00.