On Wednesday, Silvergate closed the day at $13.53; on Thursday, they closed at $5.75. A 57% loss in 2 days – what went wrong?
Investor confidence was initially lost after the bank announced it would delay filing its Form 10-K for the previous fiscal year by its March 16th deadline. Within the last year, crypto markets had been under pressure; along with this, the subsequent collapse of FTX brought many firms to their knees, many firms which had relations with Silvergate. Silvergate cut ties with Alameda Research, FTXs trading arm, in 2018 before the exchange launched.
Just before the report’s delay, Silvergate announced that it would be “evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements.”
To add, Silvergate is currently being probed by authorities for dealings with FTX. There have been no wrongdoings brought to light as of yet.
Silvergate saw over US$8B being withdrawn from their bank in Q4 following FTX’s collapse, with a $1B loss incurred in the same quarter. At the beginning of January, the bank had also laid off over 40% of its workers.
Crypto Firms End Relations With Silvergate
In the wake of the news surrounding Silvergate, various firms are getting out before a collapse; in the wake of FTX’s collapse there cannot be enough precautions.
Silvergate has lost various partners in the past 48 hours. This includes Coinbase, Circle, CryptoCom, Paxos, Galaxy Digital, Bitstamp, and CBOE. Tether had announced that they had no ties or exposure to the bank.
