Crypto bank Silvergate has seen clients pull $8.1 billion in deposits during a ”crisis of confidence” last year, forcing it to sell assets. The withdrawals came after the collapse of FTX, a Silvergate customer.

The Digital Currency Group (DCG) is set to shut down its subsidiary focused on wealth management which was launched last year, HQ Digital. The unit is shutting down due to the “state of the broader economic environment and prolonged crypto winter presenting significant headwinds to the industry.”

New York state’s attorney general has sued former Celsius Network CEO, Alex Mashinsky, for allegedly defrauding hundreds of thousands of investors through false statements made between 2018 and at least June 2022 on the condition of the company.

Top stories in the Crypto Roundup today:

• Silvergate Reveals Massive Fourth Quarter Withdrawals
• Digital Currency Group Shuts Down Wealth Management Subsidiary
• New York State Sues Former Celsius CEO
• Crypto Market Movers – BIT, OKB, LDO

Silvergate Reveals Massive Fourth Quarter Withdrawals

Crypto bank Silvergate has seen clients pull $8.1 billion in deposits during a “crisis of confidence” last year, forcing it to sell assets. The withdrawals came after the collapse of FTX, a Silvergate customer.

The California-based bank recently disclosed that deposits from digital asset customers shrank from $11.9 billion at the end of September to $3.8 billion on December 31. The disclosure saw its shares plummet nearly 43%.

Silvergate is a Federal Reserve member bank and is listed on the New York Stock Exchange, and has recently come under heavy pressure as digital asset prices keep tumbling and several large industry players file for bankruptcy.

Alan Lane, Silvergate’s chief executive officer, said the cryptocurrency industry faced a “crisis of confidence and in that kind of situation many of the institutional players have been pulling money off of these trading platforms.”

The bank said that in order to meet customer withdrawals and raise cash, it rushed to sell $5.2 billion worth of debt securities at a loss of $718 million. Lane said the crypto space experienced a “significant overleveraging and began to unwind” last year.

Digital Currency Group Shuts Down Wealth Management Subsidiary

The Digital Currency Group (DCG) is set to shut down its subsidiary focused on wealth management which was launched last year, HQ Digital. The unit is shutting down due to the “state of the broader economic environment and prolonged crypto winter presenting significant headwinds to the industry.”

DCG is the parent company of troubled crypto lender Genesis Trading, and noted that it plans to revisit HQ in the future. HQ Digital was launched last year to manage the wealth of crypto entrepreneurs and investors, and managed more than $3.5 billion as of December.

Genesis Trading notably halted withdrawals and new loan originations after the collapse of FTX in November in a move that affected other crypto firms, including Gemini. Gemini offered an Earn product to its users based on Genesis’ service.

Gemini has recently pushed DCG to find a solution to the problem that has left $900 million worth of users’ funds locked.

New York State Sues Former Celsius CEO

New York state’s attorney general has sued former Celsius Network CEO, Alex Mashinsky, for allegedly defrauding hundreds of thousands of investors through false statements made between 2018 and at least June 2022 on the condition of the company.

New York Attorney General Letitia James announced plans to ban former Celsius CEO Alex Mashinsky from doing business in the state and to seek damages and restitution for investors allegedly defrauded by Mashinsky, according to a statement released on Thursday.

The lawsuit filed against Mashinsky alleges that he made numerous false statements about the number of Celsius users, the company's recruitment strategies and the nature of its investments, claiming that the funds were being placed in safe, low-risk investments with reliable businesses.

Mashinsky is also accused of falsely claiming that Celsius was safer than a bank, despite the fact that it operated without the usual regulatory protections afforded to banks in the United States.

Celsius froze customer withdrawals in June citing “extreme market conditions” and filed for bankruptcy in July. Mashinksy reportedly withdrew $10 million from Celsius weeks before the company halted withdrawals.

Crypto Market Movers – BIT, OKB, LDO

Several tokens are leading the charge in the last 7-day period. Some of these are well-known cryptocurrencies with more liquid trading pairs, so we’ll be focusing on these over low-cap cryptos that may have higher percentage changes.

BitDAO (BIT) - BitDAO is one of the world's largest DAOs (Decentralized Autonomous Organization). Its vision is open finance and a decentralized tokenized economy. ‌BitDAO is a protocol governed by BIT token holders. It welcomes all individuals and communities to join and contribute.

OKB (OKB) - OKB is a digital asset issued by OKX, a digital asset exchange based in Malta. OKB is designed to be used as a utility token on the OKX platform, and it can be used to pay for transaction fees, participate in token sales, and access various features and services on the platform.

Lido DAO (LDO) - Lido is a liquid staking solution for ETH 2.0 backed by industry-leading staking providers. Lido lets users stake their ETH - without locking assets or maintaining infrastructure - whilst participating in on-chain activities, e.g. lending.

State of the Crypto by Top Tier Exchange Volume

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