- KuCoin CEO addresses the Silvergate collapse.
- Other major exchanges also distanced themselves from Silvergate.
- Crypto firms still rely on traditional financial services from banks.
Crypto-friendly bank Silvergate’s collapse is wreaking havoc among crypto exchanges, who scramble to distance themselves from the fallout.
KuCoin is the latest crypto exchange to do so.
“Protecting our users' benefits is a key priority for KuCoin,” said CEO Johnny Lyu. “Our users can rest assured that KuCoin has not incurred any asset losses at Silvergate Bank, and our funds are safe.”
While expressing regret over Silvergate’s liquidation, Lyu said he was relieved that users would receive their deposits in full. Lyu also called for the industry to bolster its risk management and compliance efforts.
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“As an industry, we need to take note of Silvergate Bank’s voluntary liquidation and use it as a lesson to strengthen our risk management and regulatory compliance efforts.”
Binance, Coinbase, OKX, and Paxos: ‘No Funds in Silvergate’
Several other major crypto exchanges also distanced themselves from Silvergate. including Binance, Coinbase, OKX, and Paxos, said they had no funds or losses at the bank.
On Wednesday, Silvergate said it would shut down its operations and return all the funds to credits. The bank provided financial services to crypto startups, developing a crypto-friendly reputation.
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Despite crypto promising an alternative to banking, crypto firms still rely on traditional financial institutions. These provide access to asset liquidation, enable converting assets to fiat, etc. Silvergate was one of the banks providing these essential services to crypto firms.
Silvergate’s liquidation raised concerns about the ability of US banks to serve the digital asset industry. Smaller crypto startups might be in a more difficult position going forward.
On the Flipside
- Silvergate’s collapse might boost crypto-native options for payment settlement. Market research firm Kaiko said that stablecoins could benefit from Silvergate’s collapse.
- Multiple major exchanges held their assets at Silvergate. Crypto exchange Kraken decided to cut ties with Silvergate after its liquidation announcement.
Why You Should Care
If crypto startups can’t get access to banking services, innovation in the crypto space could slow down. This could significantly impact the speed of blockchain adoption.
Read about the dangers of the Silvergate collapse for the crypto market:
Is Troubled Crypto Bank Silvergate Set to Follow in FTX’s Footsteps?
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