Silvergate Capital Corporation

In 1988, Silvergate Bank began as a traditional community bank in California. It was later reorganized in 1996 by Dennis Frank and Derek Eisele. For years, it operated as a standard commercial bank, focusing on services like real estate and business lending. The story changed in 2013 when the bank, under CEO Alan Lane, began exploring services for the emerging cryptocurrency industry. This pivot was driven by the realization that crypto companies were an underserved market for basic banking services. The key innovation was the Silvergate Exchange Network (SEN), launched to solve a major problem for crypto traders: the inability to move fiat currency 24/7. The SEN allowed institutional clients like crypto exchanges and investors to transfer U.S. dollars between their Silvergate accounts in real-time, any time of day. This product was a game-changer, attracting major players and leading to a massive influx of non-interest-bearing deposits. Riding the crypto wave, Silvergate went public in November 2019, listing on the NYSE. The bank's deep concentration in the crypto industry, however, became its undoing. When the crypto market soured in 2022 and the FTX exchange collapsed, a bank run began. Panicked clients withdrew billions in deposits. To meet withdrawal demands, Silvergate was forced to sell its assets at a significant loss, which crippled its finances. In March 2023, Silvergate announced it would wind down operations and voluntarily liquidate, marking a stunning collapse for the bank that once billed itself as a key financial pillar for the digital asset world.