Edwin Dorsey, a 24-year-old investing maven and author of the weekly newsletter, The Bear Cave, recently posted on Twitter that institutional trading platform, FalconX would no longer be using Silvergate Exchange Network (SEN).

Dorsey shared a communication that appears to be from FalconX to its customers. The message stated:

Out of an abundance of caution for our customers, we will not be using Silvergate SEN and wires, effective immediately and until further notice. They say the choice is based on publicly available information.

Silvergate Capital Corporation SI , provided a quarterly update on Thursday. The Silvergate earnings presentation showed that though the number of digital asset customers has risen, SEN transfers and transaction revenue are down year-over-year vs. 2021. SEN transfers in Q3 2022 were $113 billion, down significantly from $191 billion in Q2 2022 and $162 billion in Q3 2021. Transaction revenue is down to $7.9 million vs. $8.8 million in Q2 2021 and $8.1 million in Q3 2022. Non-interest income is down quite a bit, at $8.5 million vs. $14 million in Q3 2021. Silvergate blames the drop in revenue on the challenging digital asset ecosystem.

FalconX said in an interview, We are being extremely cautious.

The driver for this caution may be Silvergates relationship with FTX and Alameda. FTX was a big customer for Silvergate, maintaining nearly $2 billion in deposits around 10% of $11.9 billion in customer deposits.

However, FalconX maintains a business relationship with Silvergate and this may not be the end of Silvergates complicated entanglements.

Friday afternoon, Alameda Research reportedly sent $17 million USDC to FalconX.

*Cover image by Harry Burgess from Pixabay.