Filing: crypto-friendly US bank Silvergate delays its annual report, citing investigations from regulators, Congress, and the DOJ; SI plunges over 40%

Shares fell over 10% in after-hours trading. — Christy Goldsmith Romero … Commissioner — U.S. Commodity Futures Trading Commission

CoinDesk 2023-03-02

Context & Ripple Effects

Silvergate had already disclosed liquidating debt to meet $8.1B in withdrawals after FTX’s collapse and cutting 40% of its staff. Its role as a bank connecting customers to crypto exchanges had also drawn congressional scrutiny following FTX.

The delayed filing turns that pressure into a reporting problem alongside investigations by regulators, Congress, and the DOJ. It also follows reporting that accounts tied to FTX and Alameda were under a DOJ fraud-unit investigation.

First-order effects

Silvergate must postpone its annual report while managing multiple investigations, and the more-than-40% fall in SI immediately reduces investor confidence in the bank.
Regulators, Congress, and the DOJ gain a formal disclosure tying their investigations to a delayed financial filing.

Second-order effects

Crypto companies relying on Silvergate for dollar movement face greater counterparty uncertainty, particularly as prior reporting linked the bank to more than a dozen firms that had faced enforcement, closure, bankruptcy, or investigation.
Other banks serving crypto customers face a clearer compliance signal: scrutiny of a crypto-focused bank can rapidly become a liquidity, disclosure, and market-confidence problem.

Third-order effects

If this pattern persists, crypto firms’ access to U.S. banking rails will be concentrated among institutions able to absorb intensive regulatory and congressional oversight, widening the sector’s legitimacy gap.
The sequence from withdrawals to delayed reporting shows how failures at major crypto counterparties can transmit into the banking layer rather than remaining confined to exchanges and trading firms.

The trend: Crypto banking is becoming a regulatory-risk bottleneck, with the durability of dollar access increasingly tied to banks’ exposure to troubled crypto counterparties.

Discussion

@tier10k @tier10k on x
Silvergate keeps going; down 50% pre-market to new all-time low🫠 https://twitter.com/...
@caspiancey Cas Piancey on x
When a bank publicly states that it doesn't think its business can function anymore — literally how you'd start a bank run — you gotta wonder how bad things really are under the hood.
@schwab_clarence Clarence Schwab on x
Given that the FDIC only protects up to $250,000 of a customer's deposits at Silvergate, and that Silvergate announced it is examining its own viability, what is likelihood that depositors with deposits in excess of $250,000 will withdraw those funds asap from Silvergate? https:/…
@adamscochran Adam Cochran on x
Now $SI plunging again pre-market. Total down since yesterdays close now >50% https://twitter.com/...
@jcoviedo6 JC Oviedo on x
Game over $SI “These additional losses will negatively impact the regulatory capital ratios of the Company and the Company's wholly owned subsidiary, Silvergate Bank, and could result in the Company and the Bank being less than well-capitalized.” https://www.sec.gov/... https://t…
@adamscochran Adam Cochran on x
Silvergate's death spiral is going to be rough for crypto. I don't think retail investors realize how much market maker money moved around quickly via SEN, and how many crypto exchanges were/are banking with them. Stock almost down to its ATL after hours.
@tier10k @tier10k on x
Incredible insight from JPM downgrading a stock that's -40% pre-market https://twitter.com/...
@emilyjnicolle Emily Nicolle on x
For months, US authorities have been racing to sever ties between banks and risky crypto ventures, worried the financial system could someday suffer serious losses. They may have been too late, with Silvergate delaying its accounts to assess the damage https://www.bloomberg.com/.…
@tier10k @tier10k on x
Silvergate -15% after hours after delaying 10k filing, “could result in the Company and the Bank being less than well-capitalized” “investigations from our banking regulators, congressional inquiries and the U.S. Department of Justice” https://www.sec.gov/... https://twitter.com/…
@davidjadler1991 David Adler on x
#silvergate No surprise on this one. https://www.coindesk.com/...
@mikeburgersburg @mikeburgersburg on x
Hm. Any stablecoin issuers holding cash at Silvergate will want to move their uninsured deposits ASAP... And I wouldn't want to own a stablecoin with dollars in $SI .... https://twitter.com/...
@ahcastor Amy Castor on x
Silvergate Bank is imploding. It needs more time to file its 2022 10-K. The impact of FTX blowing up, followed by a run on the bank, followed by a $4.3B FHLB loan, etc could affect the ability for the company to “continue as a going concern.” https://www.sec.gov/...
@thetranscript_ @thetranscript_ on x
Silvergate Capital to delay filing its 2022 annual report because of additional losses & regulatory scrutiny: —Sold more securities after year-end —Additional losses to impact regulatory capital ratios —Going concern status at risk $SI -32% AH https://twitter.com/... https://twit…
@travis_kling Travis Kling on x
Lots of chatter on Silvergate being in imminent danger. If you still hold cash there, I'd pull that immediately.
@bitfinexed @bitfinexed on x
Life as a crypto firm can be divided up into before Silvergate and after Silvergate - hard to overstate how much it revolutionized the United States Department of Justice Criminal Divisions cases against crypto companies. https://twitter.com/...
@davidgerard @davidgerard on x
Silvergate is going down. “In addition, 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.” https://www.sec.gov/...
@rollinreisinger Rollin Reisinger on x
Silvergate is a $SI...nking ship. Now at ~$9. “Short sellers have been sending letters to the firm's auditors and US regulators detailing what they view as misconduct on the part of the bank and its clients, including allegations of money laundering.” https://www.bloomberg.com/..…
@caspiancey Cas Piancey on x
It's hilarious to me that Silvergate, which has been around since 1987, went so hard into their crypto pivot that they're literally like “we don't have a business now that FTX is dead and regulators hate crypto”
@level941 @level941 on x
Incredible. Silvergate now below covid 2020 lows lol https://twitter.com/...
@bitfinexed @bitfinexed on x
It's forever going to be a mystery, how Silvergate Bank blew up. We told you that funny business was going on years ago. https://twitter.com/...
@dylanleclair_ Dylan LeClair on x
Silvergate -31% in after hours trading. The bank expects negative changes to the company's financial conditions and does not expect to be in position to file 10k by extension of March 16. $SI SEC filing: https://www.sec.gov/... https://twitter.com/...
@unusual_whales @unusual_whales on x
Silvergate Capital, $SI, is down nearly 31% in AH. Over the last month, there were only three days when bullish vol/prem was above 50%. Take a look at the premium/vol today. Incredibly bearish before close, huge candles. Most active chains all +70% bearish. https://twitter.com/..…
@silvermanjacob Jacob Silverman on x
Isn't everyone “examining their viability” these days https://www.bloomberg.com/...
@markflowchatter Marc Lehman on x
Perma bull from KBW @MikePerito watches $SI explode then implode, downgrades the stock the day before the delay of the 10-K . Nothing to see there https://www.coindesk.com/...
@bank_reg @bank_reg on x
Meanwhile from Silvergate: - sold securities to fully repay its FHLB advances - may no longer be well capitalized - reevaluting its business/strategies in light of business/regulatory challenges - evaluating the effect all this will have on ability to continue as going concern ht…
@thestalwart Joe Weisenthal on x
“Cryptocurrency-friendly bank Silvergate Capital Corp. is studying whether it's still viable and reviewing its financial controls, following the collapse of Sam Bankman-Fried's FTX.” https://www.bloomberg.com/...
@bank_reg @bank_reg on x
Oh also: - Currently analyzing certain regulatory and other inquiries and investigations that are pending - Independent registered public accounting firm is also requesting detailed information relating to such matters https://www.sec.gov/...
@kamikaz_eth @kamikaz_eth on x
I'm actually pretty shocked Silvergate may go under - I genuinely thought they'd be fine Crypto may be much more deeply fucked than even I thought https://twitter.com/...
@degenspartan @degenspartan on x
if silvergate goes down and signature is pivoting away from crypto, we flee from the dangerous stablecoins and into the safety of gripto?
@goldtelegraph_ @goldtelegraph_ on x
“The Justice Department's fraud section is investigating Silvergate over its dealings with FTX and Bankman-Fried's cryptocurrency hedge fund Alameda Research...” Source: https://www.bloomberg.com/...
@bitfinexed @bitfinexed on x
Don't worry. Crypto exchanges will just start doing even more bank fraud and money laundering. Everything is going to be okay. https://www.bloomberg.com/...
@coinbase @coinbase on x
At Coinbase all client funds continue to be safe, accessible & available. In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.
@tier10k @tier10k on x
[DB] Coinbase Drops Silvergate as USD Banking Partner for Prime Customers, Moving to Signature: Memo
@coinbase @coinbase on x
Coinbase has de minimis corporate exposure to Silvergate.
@ap_abacus Andrew on x
UPDATE: @coinbase drops Silvergate $SI as USD banking partner. Moving Prime customers to Signature Bank. Per a memo cited by sources. **Silvergate Bank drops another 40% in pre-market trading.
@satoshiflipper Satoshi Flipper on x
Coinbase switched to Signature. Gemini uses JP Mogran Chase. Sucks for Silvergate. A nothing burger for crypto in the USA. https://twitter.com/...
@dataarocks @dataarocks on x
Silvergate lost -$400m(-47%) in market cap during after-hours trading. Their financials are so bad/unreliable that they had to delay release of annual report so avoid panic sell, which still happened anyway. Pretty scary for offramp and $USDC https://twitter.com/...
@unusual_whales @unusual_whales on x
Yesterday, Silvergate Capital, $SI, stated its evaluating its ability to stay alive. Over the last month, there were only three days when bullish vol/prem was above 50%. Premium/vol yesterday: incredibly bearish before close, huge candles. Most active chains all +70% bearish. htt…
@joshua_t_white Josh White on x
“Silvergate was the most shorted US stock as of Tuesday” Lots of people want to demonize short sellers, but it's important to have negative views impounded in stock prices. https://twitter.com/...
@adamscochran Adam Cochran on x
Given Paradigm's position (and Citadel) in SI, and Fred and Paradigm's Coinbase ownership, I suspect this was a political decision and why it took so long. But it's much more relevant than other players because of that.
@byzgeneral @byzgeneral on x
Silvergate down 50% and now Coinbase announces they'll stop working with them. This can't be good. Hopefully all these companies (minus FTX fcourse) can quickly find a replacement. https://twitter.com/... https://twitter.com/...
@silvermanjacob Jacob Silverman on x
First of all: be cool. The money's still there. Well not there there, at the place where it was, but at a new place that's nearly identical to the other place, down to its name. Please send your future money there, to the new place. https://twitter.com/...
@jcoviedo6 JC Oviedo on x
$SI How long until the bank is seized? https://twitter.com/...
@coinbase @coinbase on x
Client cash is held at FDIC-insured U.S. banks. When a client has a large dollar balance, Coinbase stores their cash in a U.S. government money market fund to keep it safe & liquid. Read how we store your money here 👇 https://help.coinbase.com/...
@lawmaster Larry Cermak on x
@tier10k @levi_alterman Kinda fucked up there isn't enough disclosure to know how much and what the exact split is. I'm assuming not much of USDC reserves sits at Silvergate but why don't we know LOL
@tier10k @tier10k on x
@levi_alterman USDC, GUSD, TUSD all hold some portion of USD reserves at Silvergate as of Dec 22
@levi_alterman Levi Alterman on x
who is exposed to silvergate still? Binance? other exchanges? https://twitter.com/...
@silvermanjacob Jacob Silverman on x
Is there a difference between the two? Gary & co are closing the fiat ramps. https://twitter.com/... https://twitter.com/...
@fintechfrank Frank Chaparro on x
Trouble brewing at Silvergate Coinbase drops Silvergate for Signature for Prime customers https://www.theblock.co/...
@akadosang @akadosang on x
At some point when exchanges find their solution to Silvergate the narrative will change from “omg no banking partners” to “everything back to normal, let's goooooo” https://twitter.com/...
@tier10k @tier10k on x
Endured a full body cavity search (Coinbase Prime KYC) to get this news first, dedication https://twitter.com/...
@tier10k @tier10k on x
[DB] Coinbase: In Light of Recent Developments & Out of an Abundance of Caution, We Are No Longer Accepting or Initiating Payments to or From Silvergate
@tier10k @tier10k on x
[DB] Coinbase Has De Minimis Corporate Exposure to Silvergate: Tweet
@coinbase @coinbase on x
Coinbase will be facilitating institutional client cash transactions with our other banking partners and have taken proactive action to help ensure that clients experience no impact from this change.
@adamscochran Adam Cochran on x
There it is. One of the biggest remaining holdouts supporting Silvergate shifting to Signature Bank. Explains the pre-market dive. I think market is giving up on trying to save SI and willing to anoint Signature as the main crypto US bank for now. https://twitter.com/...

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