New York CNN  — 

Crypto-focused lender Silvergate said it is winding down operations and will liquidate the bank after being financially pummeled by turmoil in digital assets.

“In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of Bank operations and a voluntary liquidation of the Bank is the best path forward,” it said in a statement Wednesday.

The bank’s plan includes “full repayment of all deposits,” it said.

Silvergate’s collapse is a rare example of crypto’s volatility spilling into the mainstream banking system. The bank is a traditional, federally insured lender that positioned itself as a gateway to the digital asset space.

So far, though, there appears to be little risk of Silvergate’s turmoil spreading to other banks, said Dave Weisberger, the CEO of CoinRoutes, an algorithmic-trading platform.

“The problems that faced Silvergate were primarily a result of less-than-adequate risk management, notably one of relying too much on volatile short-term deposits while lending or investing at a longer duration,” Weisberger said. “This is not like the collapse of FTX, where investors lost their deposits, but, rather, an orderly dissolution.”

Still, Silvergate’s collapse is the latest in a string of failures among prominent crypto-related companies that is fueling calls for greater regulation of digital assets.

Senator Elizabeth Warren, a vocal critic of crypto, weighed in on Twitter shortly after Silvergate’s announcement.

“As the bank of choice for crypto, Silvergate Bank’s failure is disappointing, but predictable,” she wrote. “Now, customers must be made whole & regulators should step up against crypto risk.”

Silvergate’s stock has fallen 97% from its November 2021 high — a decline that mirrors that of the broader crypto market. A string of bankruptcies and scandals in 2022, including the stunning implosion of Sam Bankman-Fried’s business empire in November, have left the crypto industry reeling.

Once valued at $3 trillion, the entire market is now worth about $1 trillion.

Wednesday’s announcement comes a week after Silvergate delayed its annual filing with the Securities and Exchange Commission, warning that it may go out of business. That news prompted the bank’s biggest crypto-industry clients, including Coinbase and Paxos, to pull their deposits.

The La Jolla, Califorina-based lender reported a $1 billion loss for the fourth quarter as investors panicked over the collapse of FTX.