Evaluating only Silvergate Bank’s profile at its peak — without knowing the outcome — the model ranked Competition as the #1 likely cause. Documented cause: Market collapse.
Key Events Timeline
FOUNDING
Silvergate Bank founded
DOWN ROUND
Sector contagion hits funding
SHUTDOWN
Sudden Collapse: Silvergate Bank ceases operations
Full Analysis
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Documented cause
Silvergate Capital pivoted from a community bank to become the dominant banking infrastructure for the crypto industry, operating the Silvergate Exchange Network (SEN)—a real-time payment rail that crypto exchanges including FTX used to transfer dollars 24/7. FTX was Silvergate's largest customer. When FTX collapsed in November 2022, deposit outflows from crypto clients accelerated dramatically. Silvergate had to sell $5.2B in securities at a loss to fund withdrawals. In March 2023 it announced voluntary liquidation.
Lesson
“Building critical infrastructure for an unregulated industry creates existential concentration risk that moves at the speed of the industry's worst actor. The infrastructure provider has no way to hedge its largest client's regulatory risk.”