Turner Wright
The parent company of Silvergate Bank, known to many in the space as one of the major crypto banks, has announced plans to “wind down operations” and liquidate the bank.
In a March 8 announcement, Silvergate Capital Corporation said the decision to shutter operations was “in light of recent industry and regulatory developments.” According to the company, the Silvergate Bank liquidation plan included “full repayment of all deposits".
Many crypto firms, including Coinbase, Paxos, Gemini, BitStamp and Galaxy Digital, announced in March they would cut ties to the bank following an investigation into Silvergate’s alleged involvement in the collapse of FTX. The bank said it would be closing its exchange network on March 3, claiming the termination was a “risk-based decision.“
Silvergate was one of the major banking partners for many crypto firms, but drew concerns about its solvency following an announcement it would delay the filing of its annual 10-K report by two weeks. The document typically provides an overview of a company’s financial situation.
With the future absence of Silvergate, it’s unclear what the impact will be on other crypto firms with funds tied to the bank or otherwise exposed. The bank reported that the transfer volume of consumer fiat deposits drop roughly $50 billion in the third quarter of 2022 compared to that over the same period in 2021.
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Ezra Reguerra
A federal judge has refused to consolidate several proposed class-action lawsuits against the FTX exchange by investors. According to the judge, the exchange and its defendants have not yet been heard.
On March 8, United States District Judge Jacqueline Scott Corley laid down the order that denied plaintiffs a request to consolidate five proposed class-action lawsuits against the bankrupt crypto exchange. Despite no defendants opposing the motion, the judge pointed out that not all defendants had the opportunity to respond yet. The order stated:
“While Plaintiffs state that no Defendant has filed an opposition, they offer no declaration attesting that they have met and conferred with Defendants and that they do not oppose consolidation.”
Plaintiffs, including Julie Papadakis, Michael Elliott Jessup, Stephen Pierce, Elliott Lam and Russell Hawkins, accused the former FTX CEO Sam Bankman-Fried and other executives of misappropriating assets, filing cases in California. While all the plaintiffs are going after Bankman-Fried, the cases also include various other defendants, including outside auditors and those promoting the exchange.
Because of this, the judge also pointed out there’s no need to consolidate before hearing the defendants’ side. “The Court discerns no need to do so now without giving Defendants the opportunity to be heard. And it would be premature to appoint interim class counsel before consolidation,” the order wrote.
Meanwhile, Bankman-Fried’s lawyers have recently signaled that there might be a need to push back the criminal trial scheduled in October. In a letter dated March 8, lawyers representing Bankman-Fried said that while they’re not formally requesting a date change, it may be necessary as they’re waiting for a substantial chunk of evidence to be sent to them. In addition, the lawyers noted that more charges were filed against Bankman-Fried in February.
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Sam Bourgi
Crypto exchange Coinbase has launched a new business solution for enterprises looking to offer Web3 wallets to their customers — a move it says will help streamline the adoption of Web3 products and services.
Coinbase’s wallet-as-a-service, or WaaS, provides enterprises with the technical infrastructure to create and launch customizable on-chain wallets, the exchange announced on March 8. Specifically, WaaS provides a wallet application programming interface (API) that allows businesses to create wallets for simple customer onboarding, loyalty programs or in-game purchases.
According to Coinbase, Web3 wallets have struggled to gain wider mainstream acceptance because of their complexity, poor user experience and the challenges associated with maintaining mnemonic seeds.
When asked about how WaaS solves the complexities of Web3 wallets, the head of product at Coinbase’s Web3 Developer Platforms, Patrick McGregor, said the new solution provides “control over end-to-end product experiences,” a reduction in “implementation cost and complexity” and helps brands improve security while reducing risks.
“Today, companies are forced to push their users through confusing onboarding flows, often instructing users to download third-party self-custodial wallets,” he said. “This context switching results in high drop-off rates during onboarding, meaning a company is never able to deliver its product to users.”
The WaaS toolkit incorporates multi-party computation (MPC), a form of cryptography that allows multiple parties to jointly compute a function without revealing their inputs to one another. In practice, MPC is said to enhance private key security within Web3 platforms. An MPC crypto wallet allows users to store their digital assets more securely because their private keys are split into multiple parts and distributed among the parties involved in the protocol.
“The problems of key loss that plague the traditional self-custody world are avoided with WaaS’ MPC cryptographic functionality," McGregor explained. “Our [software development kits] provide robust, user-friendly backup functionality to ensure that users continue to maintain access to their assets.”
The crypto exchange’s WaaS infrastructure is currently being used by companies such as Floor, Moonray, thirdweb and tokenproof.
Web3 infrastructure development appears to be heating up amid crypto winter, as startups, corporations and investors look to define the future vision of the decentralized internet. Although not everyone is convinced that current Web3 modalities are advancing the principles of decentralization, developments around MPC and decentralized privacy suggest many in the industry are taking it seriously.
McGregor noted that many companies are “seeking to build for Web3 ahead of the next bull market,” a period in which cryptocurrency prices generally rise. Coinbase is “seeing strong excitement about token-gated content (for both online opportunities and physical real-world use cases), moving loyalty programs on-chain, deep integrations between games and assets owned by users, and more.”
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This Daily Dose was brought to you by Cointelegraph.
