The cryptocurrency industry continues to be plagued by negative headlines, with Silvergate Bank’s parent company announcing it will liquidate the crypto bank due to recent industry and regulatory developments. The voluntary liquidation of Silvergate Bank follows the abandonment of the bank by high-profile partners after regulators investigated its alleged involvement in the failed FTX empire of Sam Bankman-Fried. Other major crypto firms, including Coinbase, Paxos, Gemini, Galaxy Digital, and BitStamp, had already severed ties with Silvergate by the time of its liquidation.
In other news, Alameda Research, which filed for bankruptcy, is suing Grayscale Investments and its parent company, Digital Currency Group, for allegedly violating trust agreements and contriving excuses to prevent shareholder redemptions. The lawsuit seeks to “unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts” and to realize over a quarter-billion dollars in asset value for the FTX Debtors’ customers and creditors. These allegations against DCG and Grayscale are not new, as Bitcoin billionaire Cameron Winklevoss previously accused DCG CEO Barry Silbert of orchestrating “a carefully crafted campaign of lies” to hide a hole in an associated company’s balance sheet.
Canaan, a Chinese Bitcoin miner and manufacturer, reported an 82.1% year-over-year drop in revenue during the fourth quarter, selling only 1.9 million terahashes per second worth of computer power for Bitcoin miners, down 75.8% compared to a year ago. Canaan was deeply in the red for the quarter, reporting a loss of $63.6 million. Nevertheless, the company appears to be healthy enough to withstand a crypto winter that could last for the rest of the year, as it currently has $706 million in total assets against $67 million in liabilities.
Finally, Tether has come under fire from The Wall Street Journal, which alleged that Tether and Bitfinex faked sales invoices and transactions as part of a ploy to open bank accounts. Tether countered that the story was based on “stale allegations from long ago” and “wholly inaccurate and misleading.” Tether has long been a target of conspiracy theorists in the crypto industry, who have cast doubt on the company’s collateral, reserve holdings, and association with crypto exchange Bitfinex.
The negative headlines surrounding Silvergate, Alameda, Canaan, and Tether have all contributed to dragging Bitcoin’s price below $20,000, with the crypto winter showing no signs of abating. Despite these challenges, experts predict that the industry will continue to weather the storm, with the halving more than a year away and no significant changes to industry narratives in sight.
