Crypto Lender Silvergate's Shares Slumps 29 Percent as Firm Delays Annual Report in Wake of FTX Fallout

Silvergate reported a $1 billion (roughly Rs. 8,224 crore) loss for Q4 as investors raced to withdraw deposits in the wake of FTX's bankruptcy.

Crypto Lender Silvergate's Shares Slumps 29 Percent as Firm Delays Annual Report in Wake of FTX Fallout

Photo Credit: Bloomberg

Silvergate's shares were trading at $9.57 (roughly Rs. 785) before the opening bell

Highlights
  • Silvergate's shares have plummeted about 96 percent since November 2021
  • The firm said it was unable to meet an extended March 16 deadline
  • Bitcoin advanced despite a drop in the US dollar
Advertisement

Shares of Silvergate Capital Corp slumped 29 percent in premarket trading on Thursday, after the cryptocurrency-focused lender warned it was delaying its annual report and said it was evaluating its ability to operate as a going concern.

Silvergate (SI.N) reported a $1 billion (roughly Rs. 8,21,300 crore) loss for the fourth quarter as investors raced to withdraw deposits in the wake of crypto exchange FTX's bankruptcy, and the firm's troubles highlight the fragility of confidence in digital assets.

The company said it would be unable to meet an extended March 16 deadline for submitting its annual report. It also said, in a filing to the Securities and Exchange Commission, that it had sold additional debt securities to repay debts this year and that further loss mean the bank could be "less than well capitalized".

Silvergate "is evaluating the impact that these subsequent events have on its ability to continue as a going concern," it said. "The Company is currently in the process of re-evaluating its businesses and strategies in light of the business and regulatory challenges it currently faces."

JP Morgan downgraded its rating on Silvergate's stock to "underweight" from "neutral" and withdrew its price target, saying the sale of additional securities suggests that the firm is facing continued liquidity challenges.

"We now see elevated risk of further downside in SI shares given the outstanding risk that the bank is unable to remain a going concern," JP Morgan analysts said in a research note.

Silvergate's shares were trading at $9.57 (roughly Rs. 785) before the opening bell - on track to open at their lowest in nearly three years if losses continued. The stock has plummeted about 96 percent from its record-high close in November 2021.

Federal prosecutors in Washington are probing the La Jolla, California-based company and its dealings with FTX and trading firm Alameda Research. In January, three U.S. senators asked Silvergate for details about its risk management and FTX.

Wayne Huang, co-founder and CEO of XREX, a global USD-crypto exchange headquartered in Taipei, said the issues highlighted how interconnected and vulnerable crypto banking had become.

"This accentuates the importance of having a robust banking network for crypto firms, instead of the over-reliance on just several banks," he said. Wider digital asset markets were relatively calm, though Bitcoin made little advance despite a drop in the U.S. dollar, last buying $23,457 (roughly Rs. 1926523).

"From what we gather, most crypto companies have had to already find banking elsewhere, hence we believe the damage is likely already done in terms of implications to the wider crypto market," said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.

Global cryptocurrency exchange Binance had secret access to an account at Silvergate belonging to its purportedly independent U.S. partner and transferred large sums of money from the account to a trading firm managed by Binance CEO Changpeng Zhao, Reuters reported last month.

© Thomson Reuters 2023


After facing headwinds in India last year, Xiaomi is all set to take on the competition in 2023. What are the company's plans for its wide product portfolio and its Make in India commitment in the country? We discuss this and more on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: cryptocurrency, Silvergate, Binance, FTX
China to Invest $1.9 Billion in YMTC After US Restrictions Over Security Concerns: Report
OnePlus Nord CE 3 Tipped to Launch in July, Specifications Leaked Ahead of Debut
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »