Less than a day after the firm said it would have to examine its accounts with its auditors and warned of many challenges, the great majority of cryptocurrency-friendly Silvergate Bank’s (SI) sector clients have already departed or are planning to leave the company. On the day’s trading, the share price of the bank dropped by more than 50% to a record low.
Due to “regulatory and other inquiries and investigations that are underway,” according to a statement released by Silvergate on Wednesday, the company will postpone publishing its annual 10-K filing. In a statement that looked ahead, the bank expressed concern about potential probes from US and international bank authorities.
Silvergate Is Losing Money
A few days after LedgerX, a provider of cryptocurrency derivatives, made a similar announcement, Coinbase, Galaxy Digital, Circle, Paxos, Crypto.com, Bitstamp, Cboe Digital Markets, and Gemini all stated on Thursday that they would cease ACH transfers and other business operations with the bank. Given that certain transactions with rival bank Signature (SBNY) were terminated on Wednesday, Kraken now seems to be the only significant cryptocurrency exchange still using Silvergate.
Requests for comment regarding Silvergate from a Kraken spokeswoman were not answered. In its statement on Wednesday, Silvergate Bank also stated that loans it obtained from the Federal Home Loan Bank last year would need to be repaid.
“Since December 31, 2022, a number of factors have happened that may significantly influence the timing and unaudited results originally stated in the Earnings Release, including the sale of more investment securities beyond what was previously expected and disclosed in the Earnings Release, largely to repay in full the Company’s outstanding advances from the Federal Home Loan Bank of San Francisco,” according to the filing.
The cryptocurrency news site Protos revealed in January that FHLB loans were being used by Silvergate and Signature, obtaining a total of $15 billion.
