Silvergate, a bank favored by Sam Bankman-Fried, recently announced the suspension of a preferred stock dividend.
Suspension of the Series A preferred stock dividend
In a recent press release, Silvergate bank announced the suspension of its Series A preferred stock dividend. report states that the dividend is “its 5.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A”.
The company’s statement highlighted the main reason for the suspension as preservation of capital. This statement also noted that this new decision reflects the company’s focus on maintaining a liquid balance sheet.
Silvergate notes that its primary goal is to maintain a strong capital position as it continues to navigate the volatile crypto space. The relationship between cash held and customer deposits of digital assets is good, as the network has held a more significant cash position.
SIlvergate’s suspension of dividends can be attributed to reports that the banking network was hit recently by $8 billion in crypto asset withdrawals. Most of the withdrawals were reported in the last three months of 2022.
Silvergate was reportedly forced to sell around $5.2 billion of assets to maintain liquidity. Most of the withdrawal is attributed to the fall of the former $32 billion FTX empire. Other recent reports show that Silvergate suffered a loss close to one billion dollars.
Silvergate Crypto Collaborations
Silvergate bank is one of the leading banking networks to take the initiative to focus on cryptocurrencies. The La Jolla-based bank forged financial relationships with around 1,600 players in the crypto space.
One of the important contributors was Sam Bankman-Fried, the former CEO of the now-defunct FTX exchange network. In fact, at one point, Bankman-Fried mentioned that Silvergate made banking extremely easy for cryptocurrency companies.
In addition to FTX and Bankman-Fried, this banking network is associated with many other crypto networks, some of which have been fined, shut down, or gone bankrupt. Binance US and Huobi, platforms facing criminal investigations, have connected to Silvergate.
The Bittrex exchange, which has faced controversy in the past, was a shareholder in Silvergate. According to some court reports, Voyager, BlockFi, Celsius and others also did business with Silvergate.
Other smaller networks used Silvergate to move trillions of dollars in and out of crypto markets. Additionally, Silvergate had dozens of trust accounts for Stefan He Qin, an Australian crypto Ponzi artist.
