- Shares in Silvergate fell 48% after it said it was evaluating its “ability to continue as a going concern.”
- The crypto-friendly lender has delayed filing its annual report with the SEC.
- Its finances have been hit by the crypto rout and the fallout from the implosion of the FTX client.
Silvergate Capital shares fell 48% Thursday after the FTX-linked lender delayed filing its annual report with the Securities and Exchange Commission and flagged doubts about the viability of its business.
The crypto-friendly bank’s stock traded 48.4% lower than $7.00 at last check. Shares have fallen nearly 90% in the past 12 months, as more than a dozen of the crypto company’s customers have been shut down, fined or under investigation.
In an SEC filing on Wednesday, Silvergate said it would not be able to file its 2022 annual report (10-K) by an extended deadline of March 16. It said the delay was because it required more time to see how bad its finances are. hit by events that hit the crypto world.
“The company is evaluating the impact of subsequent events on its ability to continue as a going concern in the twelve months following the issuance of its financial statements,” the California-based company said. said the filing.
“The company is currently in the process of reassessing its businesses and strategies in light of the business and regulatory challenges it currently faces,” it added.
Silvergate used to be the go-to bank for the biggest names in crypto. But the industry favorite has come under fire in recent months for its ties to embattled crypto players, and it has seen it suffer as digital asset prices have fallen over the past year.
It was caught in the fallout from the implosion of the now-bankrupt FTX, which was one of the lender’s biggest clients. Its customers withdrew $8 billion in deposits late last year after the crypto exchange collapsed in November.
In addition, it has relationships with other bankrupt crypto firms, such as centralized lenders Celsius and BlockFi, along with digital asset brokerage Voyager Digital. It also works with the US arm of crypto exchange Binance, which is reportedly under criminal investigation for money laundering and criminal sanctions violations.
Silvergate is still considering the costs of selling more assets to pay off outstanding advances from the Federal Home Loan Bank System in San Francisco and may also need to write down the value of some of its remaining assets.
These additional losses will harm regulatory capital ratios and may result in companies and banks that are less well capitalized, it said.