Silvergate Capital shares are down 43.8% in after-hours trading. The company is in the process of liquidation and liquidation of its operations.
Silvergate took a nearly $1 billion loss when FTX, its main client, crashed in late 2022. The exchange also had total customer deposits of digital assets drop from $11.9 billion to $3.8 billion. in the fourth quarter.
Due to regulatory and business challenges, the company filed a notice to delay the filing of its annual report last week. Silvergate mentioned that these challenges affected its ability to remain a going concern for 12 months.
After the announcement, the stock plunged deeply and on March 8, after trading hours, it dipped below $3.00. At writing, Silvergate (SI) shares have fallen 43.8% to $2.1.
In particular, many SIs shorted non-stop, with only 10% of calls. According to Unusual Whales, despite this, two traders opened new heavy short positions today and yesterday at SI$2 and SI$4 strikes that expire in nine days. Also, they are likely to earn 500% tomorrow.
Jeff Dorman on Twitter mentioned that SI equity will go to $0 as long as dApp and protocol tokens hold their value.
Silvergate liquidation is ongoing
Silvergate made sales in more debt securities in January and February. In the coming days, more losses could come to the stock portfolio. These will have an impact on the company’s regulatory capital ratios and therefore could lead to less than adequate capitalization.
Meanwhile, the company said it would halt operations and liquidate the bank. They added that they believed the decision was the best way forward.
Silvergate has had a troubled few months. The company laid off 40% of its staff in January after losing almost $1 billion in the fourth quarter. In addition, customer deposits fell 68% to 3.8 million at the end of the year. The company had to sell $5.2 billion in debt securities to cover the withdrawals. In addition, it went to the Federal Home Loan Bank for $4.3 billion.
The Silvergate series of events leading up to the liquidation has raised several questions about US banks and whether they should keep digital assets away and minimize access for crypto firms.
