Silvergate Capital Corporation – a California-based financial institution that focuses on cryptocurrencies – said it won’t be able to submit its annual report scheduled for March 16. It also outlined some of its main problems, hinting it might struggle to continue the normal course of its operations.

As a response, the firm’s shares dumped by nearly 32% in after-hours trading. 

More Problems for Silvergate

The firm said it sold additional debt securities to repay financial obligations and that further losses could make the bank “less than well capitalized.” Silvergate, which reported a $1 billion loss in Q4 2022 prompted by the demise of FTX, is currently evaluating the impact of its recent issues and regulatory challenges and will fail to submit its annual report due in mid-March.

Matthew Dibb – Chief Investment Officer at cryptocurrency asset manager Astronaut Capital – commented on Silvergate’s problems:

“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.” 

Wayne Huang – Co-Founder and CEO of XREX – thinks crypto banking has become increasingly vulnerable due to its interconnection with the digital asset industry. 

Silvergate’s stocks plummeted more than 30% in after-hours trading shortly after the announcement. The hectic 2022 has had a catastrophic impact on its shares, which are down approximately 90% year-over-year.

This Year’s Issues

Silvergate did not have the best start in 2023, dismissing around 40% of its workforce and abandoning several projects. It was also suspected by US Senators Elizabeth Warren, Roger Marshall, and John Kennedy of having inside information about the alleged FTX fraud.

“Both Congress and the public need and deserve the information necessary to understand Silvergate’s role in FTX’s fraudulent collapse, particularly given the fact that Silvergate turned to the Federal Home Loan Bank as its lender of last resort in 2022,” the politicians stated.

LedgerX – cryptocurrency derivatives exchange under the umbrella of the bankrupt behemoth FTX – recently cut ties with Silvergate, advising clients to stop using it to receive domestic wire transfers. Instead, it recommended they focus on Signature Bank. 

The post Silvergate Reveals Operational Issues, Shares Plunge Over 30% appeared first on CryptoPotato.

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Filed under: Bitcoin - @ March 2, 2023 2:13 pm