The crypto lender's shares slumped 45% to $2.86, a day after hitting a record low and losing 64% since the company flagged a going concern risk on March 1. Shares of Signature Bank, which uses blockchain technology, fell 9%.

Crypto exchange Coinbase Global, which severed ties with the bank last week, dropped 3%. Miners Riot Blockchain and Marathon Digital slid 3.5% and 4%, respectively.

Bitcoin steadied near at $21,647, its lowest since mid-February, with analysts and investors saying the market impact of the news was limited as it had been widely expected.

Silvergate's announcement also adds to a list of high-profile collapses of crypto market players since last year.

With Silvergate shares down 95% over the past 12 months, and 72% so far this year, shorting has been a profitable trade for bearish investors.

Nearly 85% of the company's free float is under short position with short sellers making $241 million in year-to-date mark-to-market profits, an 81.9% increase on an average short interest of $294 million, analytics firm S3 Partners said on Monday.

(Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila)