Filings: Block.One and its CEO Brendan Blumer buy a 7.5% and 9.3% stake, respectively, in crypto bank Silvergate Capital, making Blumer its largest shareholder
Nelson Wang / CoinDesk :
Context & Ripple Effects
Silvergate spent four years building itself into crypto's default bank: its parent filed an IPO seeking $50M on the back of 483 crypto clients, up from 114 a year earlier, and it later paid $182M for the Diem Association's tech with a stablecoin launch planned. By late 2022 that franchise was under strain — reporting showed the bank had served FTX plus [[a:834478|more than a dozen crypto companies that were fined, closed, bankrupt, or under investigation]].
Into that picture, filings show Block.One taking 7.5% and CEO Brendan Blumer 9.3%, making him the bank's largest shareholder. It is a bet by one of crypto's best-capitalized firms — Block.One raised roughly $4B in its ICO and had already recycled $174M into VC bets and buybacks — placed directly on the sector's most systemically exposed lender.
First-order effects
- Brendan Blumer becomes Silvergate Capital's largest shareholder at 9.3%, aligning Block.One's balance sheet with a bank whose stock had already fallen sharply year-to-date.
- Silvergate gains two committed crypto-native holders just as regulators, Congress, and the DOJ open investigations — scrutiny that soon forced it to delay its annual report and sent SI down over 40%.
Second-order effects
- With insiders this concentrated, any rescue structure matters more: Silvergate's later talks with the FDIC about lining up crypto-industry investors to shore up liquidity would directly affect what Blumer's and Block.One's stakes are worth.
- Other crypto firms relying on Silvergate for deposits and settlement now read its ownership register as a signal of whether the bank's crypto clients will backstop it — concentrating counterparty risk further inside the industry.
Third-order effects
- If the pattern holds, distressed crypto banks get recapitalized by crypto-native capital rather than traditional finance, concentrating both ownership and systemic exposure within the same small set of industry players.
- A crypto company as a bank's largest shareholder gives regulators a concrete target: the investigations already cited in Silvergate's delayed annual report would extend naturally to who owns and controls the institution.
The trend: Crypto banking is consolidating into the hands of crypto-native investors even as federal investigators close in on the sector's core financial infrastructure.