- Following Silvergate Bank’s announcement that it will delay its annual 10-K filing to fiscal 2022 with the SEC, cryptocurrency firms have begun taking steps to distance themselves from the financial institution.
- The bank started betting on cryptocurrencies in recent years and, like other companies, has suffered losses as a result of the FTX collapse.
- The US Department of Justice was investigating Silvergate’s relationship with FTX and its subsidiary Alameda Research and the firm’s shares have fallen 60%.
during the last hours cryptocurrency companies have begun taking steps to distance themselves from Silvergate Bank because he delayed filing his annual report with the United States Securities and Exchange Commission (SEC).
Despite the fact that Silvergate Bank has been in business for more than 30 years, in recent years it has begun to devote increasing attention to the cryptocurrency sector. Of course, the crypto winter was not expected to be so long and so difficult.
The bank, like other companies, has suffered losses as a result of the collapse of FTX, and In this context, the institution announced this Wednesday, March 1, that it would be delaying the annual 10-K filing for fiscal year 2022.
Silvergate Bank requests more time for its annual filing
According to release, Silvergate Bank apparently requires an additional two weeks to complete the report because “is currently reviewing certain pending regulatory and other inquiries and investigations with respect to the Company”.
It is worth mentioning that, last month, Bloomberg communicated that the US Department of Justice was investigating Silvergate’s relationship with FTX and its subsidiary Alameda Research.
So, as a result of the delay in filing with the SEC, the silvergate shares have accumulated a drop of approximately 60.93% over the last 5 days. However, that is not its only problem.
Crypto companies jump ship before Silvergate sinks
The companies of the crypto ecosystem have begun to notify their disassociation with Silvergate Banky, therefore, of everything that could happen with said institution.
The first to communicate the news was Coinbase, the main crypto exchange in the United States, through Twitter where it informed that it would no longer facilitate payments using said bank. In fact, Coinbase claimed to have “minimal corporate exposure to Silvergate” and reiterated that user funds are completely safe.
Later, also on Twitter, Paxos He announced that he would cut ties with Silvergate and assured that he had no “material exposure to Silvergate” and added ” Protecting its clients’ funds and assets has always been Paxos’ priority, and as such, we leverage a diverse network of banking partners.”.
According to Yahoo Finance, other crypto firms like Galaxy Digital, Bitstamp and Crypto.com they also halted banking transactions with Silvergate “out of an abundance of caution.” And the list seems to continue to grow.
Will Silvergate Bank file for insolvency?
Decisions by crypto companies to cut ties with Silvergate are motivated by insolvency concerns. This bank, which at the time was considered ‘cryptocurrency friendly’. already reported a loss of almost US$1 billion in the previous quarter.
All as a result of the bank having to sell assets at liquidation prices to stay liquid after the FTX collapse, and in the SEC filing, Silvergate revealed that it also had to sell assets in February 2023, so they expect to register “more losses” due to “deterioration of the securities portfolio”.
Without a doubt, what happens with Silvergate Bank will impact the entire ecosystem, regardless of whether companies begin to try to disassociate themselves. These are moments of uncertainty that lead to unstable markets, it is recommended to make decisions taking that into account.
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