(Bloomberg) -- Crypto derivatives platform LedgerX, one of the few solvent pieces of the bankrupt FTX empire, will no longer use embattled Silvergate Bank to receive domestic wire transfers beginning Wednesday.
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The company will use Signature Bank going forward, according to an email LedgerX sent to customers that was reviewed and verified by Bloomberg. LedgerX already had an existing relationship with Signature, according to two of the people who confirmed the email. LedgerX did not respond to a request for comment.
In a statement, Signature Bank said that “While we can’t comment on specific clients, we are still in the business of holding digital asset deposits.” The bank disclosed in December that it was reducing its exposure to the sector, though not completely. Silvergate did not immediately respond to requests for comment.
FTX US, the American affiliate of FTX, completed its acquisition of LedgerX in October 2021, more than a year before the crypto exchange’s shocking descent into bankruptcy. LedgerX is registered with the US Commodity Futures Trading Commission, and was an important part of FTX co-founder Sam Bankman-Fried’s push to gain power and influence in Washington. The platform previously sought approval from the CFTC to clear crypto derivatives trades without intermediaries, but withdrew its controversial application after FTX imploded.
Read more: FTX Withdraws Big Plan to Overhaul How Crypto Derivatives Trade
With about $303 million in cash on hand as of a Nov. 17 filing, the company is now one of the most desirable assets up for grabs in FTX’s bankruptcy proceedings. Initial bids for LedgerX were due on Jan. 25 ahead of a final auction scheduled for March 7. Bidders have not been publicly disclosed, but crypto players like Blockchain.com, Gemini and Kalshi were said to be among those interested.
Read more: FTX’s LedgerX Auction Shows Need for CFTC Clout on M&A: Official
Silvergate emerged as the preeminent bank for the crypto industry as many other financial institutions opted to steer clear of the sector over regulatory and compliance concerns. Signature also carved a niche for itself banking crypto firms, though it is larger and more diversified than Silvergate.
Bankman-Fried’s FTX and related entities had accounts at Silvergate as well Signature. Since the crypto exchange’s collapse, Silvergate in particular has faced heightened scrutiny from lawmakers as well as short-sellers.
Bloomberg previously reported that the Justice Department is investigating Silvergate’s dealings with FTX and Alameda Research, the related hedge fund identified as a key culprit in the exchange’s downfall. Silvergate faced a run on deposits in the wake of FTX’s collapse that forced it to sell securities and rely on short-term Federal Home Loan Bank advances to shore up its balance sheet.
--With assistance from Max Reyes.
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