SVB Financial, parent of Silicon Valley Bank, was unable to find a buyer before a bank run caused regulators to shut it down.
Sources told CNBC's David Faber earlier that deposit outflows were outpacing the sale process, making it very difficult for a realistic assessment of the bank by potential buyers to take place.
SVB was trying to find a buyer and hired advisors to do so after attempts by the bank to raise capital failed, the sources told Faber.
Shares of the bank fell 60% on Thursday after SVB announced a plan Wednesday evening to raise more than $2 billion in capital. The stock fell another 60% in premarket trading Friday before being halted. The shares never reopened for trading Friday.
Under the terms of a plan released Wednesday, SVB was looking to sell $1.25 billion in common stock and another $500 million of convertible preferred shares.
SVB also announced a deal with investment firm General Atlantic to sell $500 million of common stock, though that agreement was contingent on the closing of the other common stock offering, according to a securities filing.
SVB is a major bank for venture-backed companies, and cited cash burn from clients as one reason it was looking to raise additional capital.
However, rising interest rates, fears of a recession and a slowdown in the market for initial public offerings has made it harder for early-stage companies to raise more cash. This has apparently led the firms to draw down on their deposits at banks like SVB.
Wall Street analysts said Thursday and Friday that the troubles at SVB seemed unlikely to spread widely throughout the banking system. Morgan Stanley said in a note to clients that SVB's issues were "highly idiosyncratic."
Also on Wednesday, SVB announced it sold $21 billion worth of securities to raise cash and reposition its balance sheet toward assets with a shorter duration, which are less exposed to rising interest rates. SVB estimated that it took a $1.8 billion loss on that sale.