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Acquisition will advance Silvergate’s technical capabilities and enhance its stablecoin infrastructure initiative
LA JOLLA, Calif.–(BUSINESS WIRE)–Silvergate Capital Corporation (“Silvergate”) (NYSE:SI) today announced that it has acquired intellectual property and other technology assets related to the management of a blockchain-based payment network with the Diem Group (“Diem”), further investing in its platform and improving its existing stablecoin infrastructure. Silvergate is in a unique position to leverage this technology to further solidify its leadership position in the digital currency industry.
Assets acquired by Silvergate include development, deployment and operating infrastructure and tools to manage a blockchain-based payment network designed to facilitate payments for cross-border commerce and remittances. The network, which operated in a pre-launch phase, was built by a group of world-class engineers over a two-year development cycle with architectural quality highlighted by its security, reliability and scalability. . The acquisition includes proprietary software elements essential for running a regulatory-compliant stablecoin network.
Through its close partnership with Diem, Silvergate has gained a deep familiarity with the network and developed a strong appreciation of its potential to enable a Silvergate-issued stablecoin that will power the future of global payments.
“In the digital asset industry, money moves around the world around the clock,” said Alan Lane, CEO of Silvergate. “Through conversations with our customers, we have identified the need for a US dollar-backed stablecoin that is regulated and highly scalable to further enable them to move money without barriers. As previously stated during our Q4 2021 earnings call, we continue to intend to satisfy this need by launching a stablecoin in 2022, made possible by the assets we acquired today and our existing technology.
Silvergate Bank, a subsidiary of Silvergate, is a California chartered bank and member of the Federal Reserve with nearly a decade of experience creating solutions for the digital currency industry. Its real-time payment platform, Silvergate Exchange Network (“SEN”), allows its customers to transfer money between their accounts and the accounts of other Silvergate customers 24 hours a day, 7 days a week. By integrating the assets acquired today with the SEN, Silvergate is taking another step towards launching a next-generation global payment system that is faster, easier to use and more cost-effective than existing solutions.
“We are grateful to Diem and the community of engineers and developers who created this technology and advanced it to its current evolution,” continued Mr. Lane. “Silvergate is committed to continuing to foster the open source community that supports the technology, and we believe existing contributors will be excited about our vision going forward.”
“I am extremely proud of the efforts of our members, partners and teams who have worked tirelessly to build the Diem payment network with strong controls to protect consumers and fight financial crime,” said Stuart Levey, CEO of Diem. . “We are confident in Silvergate’s ability to advance Diem’s technology and transform the future of payments.”
Under the terms of the asset purchase agreement, Silvergate issued 1,221,217 shares of Class A common stock to Diem and paid $50 million in cash. Based on SI’s closing price on January 31, 2022, the aggregate value of the consideration was $182 million. As part of integrating the acquired assets into Silvergate’s existing technology, Silvergate expects to incur approximately $30 million in additional costs in 2022.
Goldman Sachs & Co. LLC served as financial advisor to Silvergate and Holland & Knight served as legal advisor to Silvergate. Architect Partners LLC served as financial advisor to Diem and O’Melveny & Myers LLP, Skadden, Arps, Slate, Meagher & Flom LLP and Fenwick & West LLP served as legal advisors to Diem.
Silvergate Capital Corporation (NYSE:SI) is the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry. The company’s real-time payments platform, known as the Silvergate Exchange Network, is at the heart of its suite of customer-centric payment, lending and financing solutions serving a growing class from digital currency companies and investors around the world. Silvergate is enabling the rapid growth of digital currency markets and reshaping global commerce for a digital currency future.
Stenback Hunter/Ashna Vasa
Source: Silvergate Capital Corporation