FalconX Sever Ties With Silvergate Following FTX Bankruptcy
Crypto prime brokerage firm FalconX has become more cautious in its business with Silvergate Exchange Network (SEN) and has decided to sever ties with the crypt bank in the meantime.
This information was obtained from an email that was sent to FalconX clients. Raghu Yarlagadda, the Co-Founder and Chief Executive Officer (CEO) of the firm confirmed the news by saying that the market is in a heightened risk environment. We are being extremely cautious.”
As per the sent-out email, the company said;
“Out of an abundance of caution for our customers, we will not be using Silvergate SEN and wires, effective immediately and until further notice. This action is based on publicly available information on Silvergate and is consistent with other market players.”
This does not imply that FalconX’s relationship with Silvergate has officially been nixed, rather, the brokerage firm is maintaining its relationship and account with the crypto bank. Markedly, FalconX’s email was sent out a few hours after Silvergate CEO Alan Lane said that his firm remains liquid and has enough capital to pull through the current market volatility.
To put it clearly, Lane stated speaking of the SEN, “ we still have an active performing SEN leverage book where we’re lending against bitcoin,” adding also “whether deposits are up or down, we have the liquidity and the capital ratios to support the volatility.” He boasted of Silvergate’s strong capital reserves and over-collateralized loan balance.
Silvergate’s Deposit Relationship With FTX
Since the implosion of the FTX Derivatives Exchange and its bankruptcy filing in the United States, Silvergate which is somewhat connected to the now-beleaguered crypto firm has been under major scrutiny. Lane has clarified severally that his firm’s business with FTX was only limited to deposits.
“Silvergate has no outstanding loans to, nor investments, in FTX, and FTX is not a custodian for Silvergate’s bitcoin-collateralized SEN Leverage loans. To be clear, our relationship with FTX is limited to deposits,” Lane stated.
Silvergate has maintained $11.9 billion in customer deposits with FTX representing less than 10% of this value. For now, the troubled exchange is still undergoing bankruptcy proceedings and many linked firms are yet to know their fate and that of their assets.
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