Galaxy Digital, Paxos said to no longer use Silvergate Capital for transfers (update)

Cryptocurrency financial services firm Galaxy Digital (OTCPK:BRPHF), stablecoin issuer Paxos Trust Company and crypto exchange Bitstamp will stop accepting or initiating payments via Silvergate Capital (NYSE:SI), as the crypto-focused bank assesses whether it has the ability to continue as a going concern, Bloomberg reported Thursday.

On the same day, Coinbase Global (COIN), the largest crypto exchange by trading volume, said it will no longer use Silvergate (SI) for transfers. Instead, it will facilitate client cash transactions with its other banking partners, including Signature Bank (SBNY).

Michael Novogratz-founded Galaxy Digital (OTCPK:BRPHF) took the action to assure assets of clients and the firm are safe, a company spokesperson told Bloomberg in an emailed statement.

Paxos, the issuer of Binance-branded BUSD (BUSD-USD)(until recently) and pax dollar (USDP-USD) stablecoins, took to Twitter, saying it “has discontinued all SEN transfers and wires to our Silvergate account,” adding it will keep processing all outgoing payments.

Like Coinbase (COIN), Paxos “does not have any material exposure to Silvergate (SI),” it noted.

Lastly, Bitstamp said it has suspended its ties to Silvergate (SI) in that the exchange has temporarily withdrawn Silvergate Exchange Network services for all users, according to a release. SEN is Silvergate’s (SI) real-time payments platform that serves digital asset companies and investors globally. (Updated at 3:16 p.m. ET)

Bitstamp instead requested its users to use Signature Bank’s (SBNY) SigNet platform going forward. “Client funds are secure, and Bitstamp has no material exposure to Silvergate Bank,” while warning it “can’t ensure that any new funds transferred to the Silvergate bank account will be credited to your account on our platform and may potentially result in the loss of those funds.”

Shares of SI plummeted 55.1% in mid-afternoon trading, while BRPHF and COIN retreated 1.7% and 1.8%, respectively.

Seeking Alpha contributor Bram de Haas earlier warned “its time to get out” of SI after the bank late Wednesday said its annual report will be delayed and new losses have surfaced.