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The bank driving the cryptocurrency boom from a small local lender

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According to a quote from before Sam Bankman Fried “Life as a crypto company can be divided into pre-Silvergate and post-Silvergate,” posted on the website of the San Diego bank it used to transfer customer funds to its digital asset exchange FTX.

Life as a crypto company can be divided into before Silvergate and after Silvergate. It’s hard to overestimate how revolutionizing banking services blockchain–SBF companies are

It was highly unlikely that Silvergate would end up being the bank responsible for the $40 billion cryptocurrency exchange that filed for bankruptcy last month.

With three locations in Southern California and less than $1 billion in assets, it has served as a small community lender for the majority of its 30-year history, specializing in financing small real estate transactions. But by 2019, 1,600 of the world’s top cryptocurrency miners, exchanges, and custodians were using it to deposit and transfer billions of dollars each month, quickly making it the largest cryptocurrency bank in the United States.

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Deposits increased dramatically from about $2 billion in 2020 to more than $10 billion in 2021. Total assets rose to $16 billion by this year. Silvergate’s share price has reached more than $200 just ten months after it debuted at $12 per share on the New York Stock Exchange at the end of 2019.

Note a former employee

“This was a small mortgage lender who got into cryptocurrency. It was completely bizarre.”

However, the ride ended abruptly last week as US senators looked into the collapse of Bankman-FTX, Fried’s which has been accused of mismanaging customer deposits and now faces losses of up to $10 billion, with Silvergate in focus.

US senators wrote to Silvergate CEO Alan Lane saying the bank “appears to be at the center” of how to move this money around the Bankman-Unique crypto empire. It stated that Silvergate may have violated anti-money laundering laws if such a “scheme” had not been discovered.

In a public letter published last week, Lin attempted to assuage market concerns about his links to FTX by accusing short sellers of spreading “speculation” and “misinformation.” He claimed that the bank has “Massively investigated FTX and its related entities.”

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The Bankman-Fried adoration has been quietly removed from Silvergate’s website along with all references to its former client. Two of the bank’s top clients were wiped out by the FTX collapse.

Approximately 10% of Silvergate’s total assets are owned by FTX, whose clients include a cryptocurrency lender BlockFiwho suffered greatly as a result of the repercussions. According to its bankruptcy filings, FTX and its “associated entities” hold about 20 different accounts at Silvergate.

To respond to the letter and provide a “full accounting of its relationship with FTX,” the bank has until December 19 to do so.

Silvergate’s noticeable shift in strategy over the past few years is the brainchild of Lane, a 60-year-old Temecula, Calif., devout Catholic and grandfather of more than 20 kids.

When the bank failed in 2008, Silvergate co-founders Dennis Frank and Derek Eisele hired Lane with the goal of turning it into a full-service commercial bank, according to people familiar with the company. It has already turned in a number of small neighboring banks.

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But Lin started experimenting with cryptocurrency in 2013. That year saw a record high for Bitcoin, a new technology that had been around for four years, surging 7,000% to reach $1,000 for the first time. Cryptocurrency gradually began to become widespread.

We needed deposits and Alan was starting to see those companies like Coinbase They were kicked out of the banks.” “So, he thought the deposits could be found if we could do business with Coinbase. The Fed agreed when Alan went in there and said, “We want to provide basic banking services to bitcoin companies.”

Major financial institutions began rejecting banking cryptocurrency exchanges and began blocking transfers by customers to buy cryptocurrencies out of fear that an emerging asset class was linked to money laundering and illegal drugs. In addition, traditional banks are not designed to accommodate the need for cryptocurrency traders to transfer funds on the weekends.

According to the former factor, Lin and Reynolds recognized the void and inefficiency in the rapidly expanding market and seized the opportunity. “The two of you just broke up in the same room,” he declared. The founders of Silvergate were involved in real estate, but they embraced the shift in strategy because it was profitable.

The Silvergate banking team was sold, and the real estate division of the company was reduced over the next six years by Lane and Reynolds. Its crypto-business clients have grown from 20 in 2016 to more than 1,000, including Xapo, Paxos and Bitfury, and its management has begun to investigate riskier ways to boost its balance sheet, such as launching stablecoin and structuring loans against cryptocurrencies.

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In 2017, they introduced the Silvergate Exchange Network (SEN), a platform that allowed cryptocurrency users to transfer USD instantly and around the clock from their bank accounts to a cryptocurrency exchange, provided both the exchange and the user were Silvergate customers.

Then, in March of this year, Silvergate made its biggest-ever foray into US dollar lending backed by bitcoin By providing a $200 million loan to a company owned by American crypto billionaire Michael Saylor.

Frank Mercadante, Alan’s mentor, former president, and investor in Silvergate, said,

“Alan saw this opportunity in cryptocurrency, which I still don’t fully understand, and he built it into something I absolutely do.”

But there were risks. According to two former employees, Silvergate had to hire twice as many compliance officers as similar banks of its size. A new cryptocurrency exchange usually takes six months to open a bank account. One person said, “The main KYC and AML risks were seriously considered again in 2014” — when Silvergate won its first cryptocurrency client. For unspecified reasons, Silvergate has terminated its partnership with binancethe largest cryptocurrency exchange in the world, in June 2021.

According to a source close to the company, “When they got into it, cryptography was this new little thing, and I guess they didn’t realize it was going to take off as quickly as it did.” They put all their chips in this direction, but it soon got the better of them and grew bigger.

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Uncertainty and risks in the unregulated cryptocurrency sector

The bank will have to consider its exposure to the unregulated sector as the risks of fraud and bad players appear to be higher than ever as lawmakers scrutinize Silvergate’s partnership with FTX.

According to a person familiar with Silvergate, “the bank has no real responsibility for stopping transactions between entities that appear to be legitimate.” “This is the key to why there is not enough regulation of cryptocurrency companies. No one is required, for example, to maintain a separate account with only customer funds.

Although Silvergate’s share price, at $23, is still nearly double what it was at its initial public offering, it’s down to half its pre-crash level before FTX and is down nearly 85% this year. According to analysts at Morgan Stanley, the bank is dealing with a lot of uncertainty about its digital deposits, which are down 60% so far this quarter. They continued, “The collapse of FTX could also lead to litigation and major risks across the crypto ecosystem.”

The current environment presents challenges to the plan we started in the year, Reynolds said, and we’re still processing what happened.

“You have to ask these questions about where digital assets are going from here. This is a very big reputational issue for this industry.”

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BNT/USD is trading near the $0.50 resistance

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The Bancor price prediction shows that BNT is crossing the 9-day and 21-day moving averages while the coin is taking off to the upside.

Bancor Prediction Statistics Data:

  • Bancor price now – $0.34
  • Bancor’s market capitalization is $55.8 million
  • The circulating supply of Bancor – 162.5 million
  • The total supply of Bancor – 162.5 million
  • Bancor Coinmarketcap Ranking – #287

BNT/USD market

Key levels:

Resistance levels: $300, $310, $320

Support levels: $130, $120, $110

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BNTUSD – daily chart

BNT / USD It is currently trading at $0.345 after touching a daily high of $0.490, and is likely to return above the 9-day and 21-day moving averages. However, in case the buyers can push the price above the $0.50 resistance level, then the daily candlestick may close above this level, and the price may rise towards the upper boundary of the channel.

Bancor Price Prediction: Bancor is preparing for an upward movement

According to the daily chart, the Bancor price It is moving near the $0.40 resistance level as the coin is preparing for additional gains. The technical indicator’s RSI (14) is also moving to cross above the 50 level, where the signal line is pointing up to signal a buy signal.

However, if buyers are able to push the price and hold it above the 9-day and 21-day moving averages, Bancor price could rise towards the upper boundary of the channel to reach the potential resistance levels at $0.50, $0.55, and $0.60. While crossing below the lower border of the channel, it could lift the currency to the support levels at $0.25, $0.20, and $0.15, respectively.

Against Bitcoin, Bancor is following a bullish rally, and it could swing higher to cross above the upper boundary of the channel that could identify the resistance at 2400 SAT and above. On the other hand, if the market price crosses the lower boundary of the channel, it may reach the support level of 1800 SAT and below.

BNTBTC – Daily Chart

However, the technical indicator’s RSI (14) is currently moving to cross above the 50 level as the signal line is pointing north to confirm the upward move. Moreover, any further upward movement may create additional gains above the channel.

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DYDX/USD could rise above $1.20

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Since the coin starts the upward movement towards the upside, the dYdX price forecast is likely to move steadily inside the channel.

dYdX prediction stats data:

  • DYDX price now – $1.10
  • DYDX market capitalization – $72.7 million
  • Circulating supply of DYDX – 65.5 million
  • Total supply of DYDX – 1 billion
  • DYDX Coinmarketcap Rank – #198

DYDX/USD Market

Key levels:

Resistance levels: $2.00, $2.20, $2.40

Support levels: $0.50, $0.30, $0.10

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DYDXUSD – daily chart

DYDX/USD is likely to cross above the 9-day and 21-day moving averages as the currency begins its upward movement. in the past few days, dYdX price Struggles to cross over to the positive side. According to the daily chart, the RSI (14) technical indicator moved to cross above the 40 level, confirming the bullish movement of the currency.

dYdX Price Prediction: DYDX is ready for an uptrend

the dYdX price It is currently moving north. If the currency continues its upward movement, the bulls may cross above the 9-day and 21-day moving averages, which could reach the resistance levels at $2.00, $2.20, and $2.40. At the time of writing, DYDX/USD is showing a slight bullish movement on the daily chart.

Conversely, if the coin slips below the lower boundary of the channel, it may bring the coin back to the $0.50, $0.30, and $0.10 support levels, respectively. Meanwhile, long-term buyers should not be alarmed by the small impact down the road, as the future of DYDX is assured as evidenced by the technical indicator’s RSI (14).

Against Bitcoin, dYdX price is hovering below its 9-day and 21-day moving averages as the coin is poised for an upward move. The technical indicator’s RSI (14) also confirms the upward movement as the signal line encounters the 40 level. On the contrary, a potential downside move could emerge if the market price crosses below the lower boundary of the channel, which could reach the support level 200 SAT and below.

DYDXBTC – Daily Chart

Meanwhile, any further bullish move above the moving averages could push the coin to the 1200 SAT resistance level and above, and this could take the coin to a new high, and the market could remain in the bullish zone.

But, Dash 2 Trading It gives you the ability to improve your trading and scalping profits with effective crypto trading recommendations, automated trading, and analytics features. There is a D2T token pre-sale going on and time is running out. The launch of the pre-sale dashboard is coming soon as the product developer is ahead of schedule. To date, the prequel has raised nearly $12 million.

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Blockchain

SBF to Enter Plea Deal, Mango Exploiter Arrested, Celsius News: Hodler’s Digest, Dec. 25-31

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