Kraken will suspend Automated Clearing House (ACH) deposits and withdrawals from March 27 due to the recent closure of its banking partner Silvergate Bank.
“As of March 27, 2023, Kraken customers will no longer be able to access ACH deposits and withdrawals via Silvergate,” the crypto exchange reportedly said. Said In a statement, noting that it is actively looking for a new banking partner.
“We are working to make ACH funding options available through alternative funding providers as soon as possible and will communicate details with customers as soon as possible.”
Kraken elaborated that this will not affect other services of the exchange. In addition, the San Francisco-based company will resume ACH deposits and withdrawals as soon as it finds new funding providers.
As informed ofSilvergate Capital Corporation, the parent company of Silvergate Bank, announced earlier this month that it has decided to wind down its operations and liquidate its subsidiary.
Silvergate was one of the lenders most affected by the fall of FTX last November. This faced a bank run Following the collapse of FTX and had to sell $5.2 billion of debt securities held on its balance sheet to cover approximately $8.1 billion in user withdrawals.
As a result, the bank lost $718 million, which reportedly exceeds the bank’s total profits since 2013.
Kraken to set up its own bank amid recent banking woes
Kraken plans to set up its own bank amid the recent banking crisis, which saw three major US banks collapse in a week.
The new bank, called Kraken Bank, will be designed to mine cryptocurrencies through the Wyoming Special Purpose Depository Institution (SPDI) framework, which is meant to enable the bank to prioritize asset custody and safekeeping.
“We are building a better type of crypto and bitcoin bank for our customers,” the exchange said. Said In a recent announcement. The Wyoming, USA-based bank is called Kraken Financial, but “due to high demand, it will be known as Kraken Bank.” Added this:
“We are looking for products like deposit accounts in USD and crypto assets (ex bitcoin), multiple funding and payment options, institutional custody products (qualified custody for advisors and broker dealers), IRAs and many more.”
The move comes as the exchange has recently been in hot water with the SEC over its staking product. In early February, the stage reached An agreement with the SEC to cease offering staking services or programs to customers in the country.
According to the SEC, Kraken “failed to register the offering and sale of its cryptoasset staking-as-a-service program,” which the commission now qualifies as securities. In addition to the suspension of service, Kraken agreed to pay $30 million in disgorgement, pre-judgment interest, and a civil penalty.
Notably, the SEC also recently Sent A so-called “Wells notice” to Coinbase threatens the crypto exchange with legal action regarding some of its listed digital assets, its staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet.