- Silvergate shares fell 48% after it said it’s 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 client FTX.
Silvergate Capital’s shares plunged over 48% Thursday after the FTX-linked lender delayed filling its annual report with the Securities and Exchange Commission and flagged doubts about its business survival.
The crypto-friendly bank’s stock was trading 48.4% lower at $7.00 at last check. Shares have fallen almost 90% in the past 12 months, as more than a dozen of its crypto firm customers shut down, were fined or came under investigation.
In an SEC filing Wednesday, Silvergate said it won’t be able to file its 2022 annual report (10-K) by an extended deadline of March 16. It said the delay is because it needs more time to look into how badly its finances have been hit by the events battering the crypto world.
“The company is evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements,” the California-based firm said in the filing.
“The company is currently in the process of reevaluating 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 been under fire in recent months for ties to embattled crypto players, and it is seen as having suffered during as prices of digital assets tumbled last year.
It has been caught up in fallout from the implosion of now-bankrupt FTX, which was one of the lender’s major clients. Its customers withdrew $8 billion in deposits late last year after the crypto exchange collapsed in November.
In addition, it had relationships with other bankrupt crypto firms, like centralized lenders Celsius and BlockFi, along with digital asset brokerage Voyager Digital. It has also has worked with crypto exchange Binance’s US arm, which is reportedly under criminal investigation for money laundering and criminal sanctions violations.
Silvergate is still figuring out the costs of selling more assets to repay outstanding advances from San Francisco’s Federal Home Loan Bank System and it might also need to slash the value of some of its remaining holdings.
These additional losses will hurt its regulatory capital ratios and could result in the company and bank being less than well-capitalized, it said.